RE: BTCUSD - Technical Analysis November 4, 2017 - Current price $7173
Speaking of derivatives for BTC....Can you imagine if they create leveraged Bitcoin ETF's like they have for natgas, oil, and any commodity imaginable? Good lord it would be volatile. A day traders dream... and if they had an inverse ETF one could do an arbitrage play by shorting both the long and the short fund, hold the position for a few months and profit from the decay.
An example of this type of trade would be shorting both UGAZ and DGAZ simultaneously (3x leveraged natgas etfs) for a period of a few months and profiting from the net decay of the sum of the prices, which always trends downward over time. I've not tried this strategy because I've not found a broker that offers shares of DGAZ to borrow (I've heard Fidelity has them sometimes). I know one person who's done it and he's made a lot of money in the process. I have made money shorting just UGAZ before when futures contract spreads are high but I had to constantly monitor the price because of the volatile nature of it (price spikes out of nowhere = squeeeeeeze!).I don't mess with that anymore because I don't have time or the nerve for it now.
Regarding bitcoin (back on topic lol), I can't decide whether to lighten my position a bit and take some profits from earlier buys from some weeks ago or hold all of it thru the fork later in the month. Those long upper wicks on many of the recent candles are evidence enough for me that BTC needs to stop and catch its breath before heading higher. I'm curious what will happen to the price after the fork. I suspect we'll see a nice pullback and it could be a good short opportunity for short term traders.
Nice charts, as always. Have a good weekend.
I personally am trading bitcoin to accumulate more bitcoin as the FOMO is not over yet - but in the immediate term my read of the chart is a downtrend.
I would absolutely love the ability to have a leveraged ETP on btc -- especially if options become available for it. That would be absolutely insane!
I tend to short volatility etf VXX, or take a long in XIV every pop, nothing decays worse than volatility futures in capital markets!
But absolutely you could, provided you have the capital to never get a margin call perpetually hold leveraged ETPs short to capitalize on price decay. Energy is best for this. Gold is another option but with the fed cycle the trade is more complex. SPXS is another good one to short.
I got into XIV when it was $16 a couple of winters ago and sold at $22. I think it’s trading around $80 right now? Makes me want to kick myself. It’s a good one. It benefits from contract rollover decay of its inverse like 90% of the time. When VIX is in Contango XIV is a winner.
the XIV parabolic move is an anomaly - this is the lowest historical volatility in the stock market since 07 - difference now is that in 2014 the index became completely derived from options bets on the S&P mini futures - so its hard to say if thats part of why this run is occurring ... but as you know 1 decent spike in volatility can wreck XIV.
Yes it is a bit of an anomaly and I think the markets are somewhat rigged and have been for the past several years at least...rigged in favor of the bull. My trading experience is less than a decade old so the current environment is the only one I've ever really known. I've met a lot of people on ihub (used to hang out there a lot, not so much anymore) who have been around a long time saying that it didn't used to be like this--things used to be easier to predict and market moves made a bit more sense than they do now. I think some of it has to do with algos but I also think the govt has had a hand in it as well.
Lately it seems like the market just has to close to the upside no matter what, meanwhile we have things like netflix with a PE of 300 -- 300 years to double your money. Something has to give.
further, on the flipside, when nixon was president as soon as any inkling of an impeachment motion hit, stocks entered a 1 year bear market -- perhaps we may observe something similar, all things considered.