Arbusers

I am not an authority in technical analysis obviously, but I believe I have a great deal of understanding it's nature.

IMO, short term technical analysis in BTC is not working. But at the same time, when you practice technical analysis with lines deeply rooted in the past, the possibility of a credible analysis is on our favor. That is why March's trendline is not that strong, while the formated triangle is very powerful. The descending side of the triangle is much much stronger than the ascending March trendline.

The March trendline was clearly broken yesterday with the body of the candlestick. But this new candlestick would immediately create a new trendline (see the following chart). This new trendline by definition is weaker than the previous one simply because it is underpinned by 2 prices, while the initial March trendline was underpinned by 4. Of course, you can never be sure, but we are trying to identify bets with value.

Many thanks for participating in this discussion.

I would like to add a crucial warning about btc price action. There is a bot that is using correlation trading between btc price and s&p price. When the correlation of those 2 assets differs more than 2 standard deviation (2 sigmas), this bot is triggered and goes long the asset that is cheaper and short the asset that is more expensive. The specific bot is being used by institution funds who have very big pockets and can easily move the price of btc. This means that if for example the S&P does a big move either way, the bitcoin price will follow. Until this assumption for whatever reason breaks (for example, a big event that will add a huge amount of interest in bitcoin), be prepared for those 2 assets to go hand in hand in big moves. It is crucial to understand that BTC follows S&P and not the other way. The bot first started to operate somewhere between December-February 2019. I have confirmations from market analysis companies which work closely with other crypto funds that this type of bot exist, but i have also experienced this type of action myself. So, always keep an eye on S&P 500.

I decided to close all long positions on BTC.

We opened our positions at 6800 and we are closing them at 9450. It is an excellent trade.

The reasoning for closing positions.
1. I confirm Ilovethisforum's observation. There is correlation between S&P500 and BTC. It seems that someone who has the means is trying and currently implementing this correlation, and therefore for the time being it makes no sense speaking of an assett against FED's dollar printing orgy.

2. This currency printing orgy came to a stopover, as almost all central banks announced their actions to print money. The last news came from the FED once again, who announced the buying of individual corporate debt. This is communism at it's best.

3. The psychological barrier of 10.000$ proved to be very resilient.

4. Technical analysis show that we are very near the upper side of our triangle that proves to be extremely strong. It is now time for the lower side of our triangle to be tested.

Blending all these, I came to the conclusion that we have more possibilities to see a lower price. This is a value bet as I see it and I decided to take it. Those with long horizons will also win, but for now, the risk-reward ratio indicates that BTC price appreciation is not iminent.

Thank you for your comments.

Information is not intended to be and does not constitute financial advice or any other advice. Information is general in nature and is not specific to you. You should not make any decision, financial or otherwise, based on any of the Information without undertaking your own due diligence.

Thank you for this excellent effort. Waiting for more.

Closed my position on BTC.

Waiting for the next point.

Thanks for the profits, I will have a beer in your name.

FYI, today is the first day after a long period of time where there is no correlation between S&P500 and BTC.

arbusers wrote: FYI, today is the first day after a long period of time where there is no correlation between S&P500 and BTC.

How long?

I am trying to prove the correlation based on ilovethisforum's price action warning. It is not working for me. Today indeed it seems that there is a small spike of btc while the sp500 is rather sideways, but looking at the last month this has happened numerous times. Perhaps I just don't understand something obvious.

Are you willing to elaborate a little on the technical explanation to why today is different?

The way I see it, correlation started around February the 20th. See the following graph showing BTC and SP500 prices:

VidaBlue wrote:Are you willing to elaborate a little on the technical explanation to why today is different?

I wish I could. More time is needed, probably a couple of days, before we have more price data on what is happening. The previous spikes were corrected straight away, some of them within the same trading day.

And of course, no correlation before February the 20th.

VidaBlue wrote:

arbusers wrote: FYI, today is the first day after a long period of time where there is no correlation between S&P500 and BTC.

How long?

I am trying to prove the correlation based on ilovethisforum's price action warning. It is not working for me. Today indeed it seems that there is a small spike of btc while the sp500 is rather sideways, but looking at the last month this has happened numerous times. Perhaps I just don't understand something obvious.

Are you willing to elaborate a little on the technical explanation to why today is different?

I agree with VidaBlue. I don't understand as well where you see the correlation between them.
Do you bring daily parameters? monthly? hourly? Maybe we should calculate the correlation taking all the dates, and just put them in an excel. It's an easy mathematics calculation like we did in the degree, or even in the school.

Me, like a lot of people here, has some money that are doing nothing right now, just sleeping. I think that have to be some parallelisms between different markets. For example, i have the feeling (just time will give me the reason or not) that house prices will fall down in the coming years. This is just my feeling, but maybe we have some dates that proves this feelings to be truth as well. Maybe there is a correlation between unemployment levels and house prices two years after that dates? I don't know..., just thinking...

In other post, Arbusers said that Oil prices anticipates the way that the rest will move.

If we clearly identify this kind of correlations, like SP500-BTC, we could take advantage from them.

VidaBlue wrote:

arbusers wrote: FYI, today is the first day after a long period of time where there is no correlation between S&P500 and BTC.

How long?

I am trying to prove the correlation based on ilovethisforum's price action warning. It is not working for me. Today indeed it seems that there is a small spike of btc while the sp500 is rather sideways, but looking at the last month this has happened numerous times. Perhaps I just don't understand something obvious.

Are you willing to elaborate a little on the technical explanation to why today is different?

Hello Vidablue,

the correlation has nothing to do with everyday movements. The fund that plays the correlation trade, searches for very big differences in correlation of the 2 tickers. For example, lets say that S&P500 declines 0.5% and BTC goes up 0.5%. The trade will not trigger because the divergence is very small based on the average. But if S&P500 declines 3% and BTC is up 0.5%, the trade will gets triggered and the fund will start to buy S&P500 and sell BTC in order this divergence to go to near the average. This will create huge pressure for BTC and will decline, because it is hasn't very deep liquidity in order absorb the fund's selling orders.

Thank you all 3 for answering with graphs, bot functionality and perspectives.

It seems that the btc line crossed the sp500 line twice in 2 big up moves and 1 down move since February in Arbuser's btc-sp500 overlay. Believers in the correlation and the large impact of the bot on btc price movements should deduce the bot's action parameters, anticipate the bot triggers and trade accordingly. That will give counteraction to the bot. For this reason, if such a bot has a high impact on btc price, it must also have a limited life span as it cannot, whatever the size of it's pockets, beat the market forces in the long run.

Do you disagree? Do you think that such a correlation could continue for months and years to come?

VidaBlue wrote: Thank you all 3 for answering with graphs, bot functionality and perspectives.

It seems that the btc line crossed the sp500 line twice in 2 big up moves and 1 down move since February in Arbuser's btc-sp500 overlay. Believers in the correlation and the large impact of the bot on btc price movements should deduce the bot's action parameters, anticipate the bot triggers and trade accordingly. That will give counteraction to the bot. For this reason, if such a bot has a high impact on btc price, it must also have a limited life span as it cannot, whatever the size of it's pockets, beat the market forces in the long run.

Do you disagree? Do you think that such a correlation could continue for months and years to come?

Good question VidaBlue. In order to find if this bot can continue its action for a long period of time, we need to analyse the market structure of bitcoin and cryptocurrencies. From my experience i know that in bitcoin market the self-fulfilling prophecy strategy works very well. What i mean by that. Most participants in this market are traders that use stop losses and most of them use technical analysis in order to find entry and exit points. If for example btc price does a breakout from a price range that most participants see, then stop losses will get trigger, trend bots will follow and last fomo players will join. So if a price range breaks up or down, the majority of participants will start betting accordingly. This creates a self-fulfilling prophecy effect. When you play this game, the participant with the biggest pocket can start this effect. This participant is the fund that places bets based on the standard deviation of correlation with s&p500(maybe there are more than 1 i don't know,but surely exist at least 1). This means that if this market structure stays the same, then nothing will change and the btc price will be a "slave" of s&p500 dumps or pumps. In my opinion, in order this market structure to change, btc fundamentals must change( more adoption,usage, btc = digital gold argument), so the participants of the market will change and will not dominated by technical analysis traders. For example, think about the S&P500 market structure, there is a big player in town that does whatever he wants(FED). Can the stock market structure change and not correlates with FED's policies? Sure, if something big happens and FED lose its credibility or i don't know what else. At some point market will evolve and change but until then the facts say that btc = slave of s&p500 pump and dumps.

CharlieSheen99 wrote: Me, like a lot of people here, has some money that are doing nothing right now, just sleeping. I think that have to be some parallelisms between different markets. For example, i have the feeling (just time will give me the reason or not) that house prices will fall down in the coming years. This is just my feeling, but maybe we have some dates that proves this feelings to be truth as well. Maybe there is a correlation between unemployment levels and house prices two years after that dates? I don't know..., just thinking...

This question doesn't belong here, but I am willing to answer it.
Behavioral investing is one of the 5 pillars of investing. If we accept it's importance, we can then accept the importance of cycles in the economy. These cycles are not correlating, but most probably they follow one another. There is a turn in the way that cycles behave. This turn is as follows:
The cycle in profits.
The cycle in attitudes toward risks.
The credit cycle.
The distressed debt cycle.
The real estate cycle.
Blend them all together and you have the Market Cycle. As you see the real estate cycle comes at the end. If we accept that a normal Market Cycle takes place, then you should expect the real estate prices to plunge in the following years.
So the question that you have here is...Is this a normal Market Cycle? You can see that people like Buffett and Druckenmiller fail to answer this question. If they fail, then who are we to answer it?
All you can do is wait for a longer period of time and see if indeed the cycle is closing here or not. I can only guess that mid-November will give you the answers that we are all looking for (including Buffett and Druckenmiller).

VidaBlue wrote: Thank you all 3 for answering with graphs, bot functionality and perspectives.

It seems that the btc line crossed the sp500 line twice in 2 big up moves and 1 down move since February in Arbuser's btc-sp500 overlay. Believers in the correlation and the large impact of the bot on btc price movements should deduce the bot's action parameters, anticipate the bot triggers and trade accordingly. That will give counteraction to the bot. For this reason, if such a bot has a high impact on btc price, it must also have a limited life span as it cannot, whatever the size of it's pockets, beat the market forces in the long run.

Do you disagree? Do you think that such a correlation could continue for months and years to come?

This is a very interesting question. I am afraid there is no easy answer here. We must have a multidisciplinary approach to answer it, and then combine the findings with our observations.

1. The market capitalization of Bitcoin currently sits at 117.81 billion U.S. dollars. The size of it is indeed small. To give you some measures to compare, Berkshire has 140 billion U.S dollars cash as we speak and the total assets of the company are almost 1 trillion. Companies like Berkshire and Oaktree can't invest in Bitcoin because of the market capitalization. That means that even a much smaller fund has the ability to determine Bitcoin's price very easily. You don't need 117.81 billion to determine the price. 10-15 billion are enough.

2. The market capitalization of Gold currently sits at 9 trillion U.S. dollars. The size difference is immense. We have seen Gold prices being manipulated for years from central banks. Of course, there is no proof on that. The only proof is the chart of the Gold price combined with national interests. However, the chart reveals an undeniable reality. The gold price achieved the escape velocity needed, the break free from central banks manipulations. Somewhere around 2006, Gold achieved the escape velocity, simply because no power could keep the price down. In physics, escape velocity is the minimum speed needed for a free, non-propelled object to escape from the gravitational influence of a massive body, that is, to achieve an infinite distance from it.

3. Bitcoin will achieve this escape velocity when the market capitalization becomes so big, that no gravitational influence of a massive body will be able to keep it down. To make things simple, when the interest of the public and institutional investors becomes that big, that no massive power (Central banks, big nations, etc) will be able to keep it down. At this point, we have seen 10.000 USD as a price that must be broken, however, I m convinced that several barriers must be broken before Bitcoin price gets the acceleration needed.

4. At this point in time, it is easy to keep Bitcoin's price down, but if governments, and especially the US, continue this money printing orgy, inevitably Bitcoin will get the acceleration needed to escape. The way I see it, governments will continue to print like no tomorrow. In every crisis, no matter how it occurs, they will just click and 5-10-40 trillion U.S. dollars will magically be produced. People that work to earn dollars, will be very angry against people who don't work to produce dollars. That said, we don't know how long this correlation will go. My understanding is that governmental power is producing this correlation.

5. Absolutely no-one is able to predict the future. Whoever says he could, is simply a Charlatan. What we can do as prudent investors, is get ready for the future, and get the right positions so we benefit from what lies ahead. When the tidal wave comes, it is better to surf on the top of it, than swim behind it.