Bitcoin price action shows hedgies may be jumping in

There is no way you can say Wall Street is not piling into bitcoin the last two days.

The move from roughly $11,250 to $15,800 (see chart below) cannot be attributed to buy and hold crypto enthusiasts buying an additional 0.0002 bitcoin. Continue reading

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Who will catch the falling knife that is bitcoin price?

September has been the cruelest month for bitcoin.

On the first of the month the price was $4,950. This morning’s low price was $3,036. Nearly a 40% decline over the first half of the month.

While many stories point to the Chinese crackdown on the cryptocurrencies through the exchanges and others give a nod to JPMorgan chief Jamie Dimon’s comments at the beginning of this week, I believe it has more to do with the newest investors in the crypto space.

The “investors” who came in at $3,000 and up — after finally learning how to buy a crypto — all they wanted to know after that was how to sell it. No buy and hold. Make a quick return and get out.

With that said, I could see bitcoin settling around this level as the shake out of newbies is completed. Remember no chart goes straight up from left to right.

If you recall earlier this summer, bitcoin had roughly a 34% drop in mid June, but by the middle of July put in a floor in at $1,995 and marched on to just below $5,000 from there.

You need a shake out in the markets — whether its stocks or cryptos — to set a floor to build on. The trouble is 40% down in two weeks is teetering on a panic and re-enforcing Dimon’s comments of it ending poorly.

However, the huge sell off on a percentage basis should not be directly compared to stocks since bitcoin does not have a Plunge Protection Team to come in and catch the falling knife when the market is experiencing panic selling.

Markets shrug off Comey’s firing

I am only mildly surprised with the market reaction to President Trump’s firing on Tuesday of FBI chief James Comey after the trading closed.

I don’t want to make the Comey sacking seem to be a Constitutional crisis, however markets generally despise unexpected events and can whipsaw on the rumor, nevermind the surprise event.

On Tuesday night stocks futures opened 20 minutes after the firing and were down only marginally at 30 Dow e-mini points. The raw emotion of the event — even for algos — should have had a more dramatic reaction, in my opinion. Hell, the 10-year bond saw strong buying overnight.

My only explanation for this action (or lack thereof) is to amend an old surfing adage: You don’t want to be goofy-footed when a big tax cut is on the horizon.


An update on bitcoin. The digital currency traded above $1,700 after a sell off from $1,750 range overnight. It too had a sell off when the Comey news broke. This morning at 7am EDT its at 1,724.


Speaking of on the horizon, Thursday is a big day for earnings. Department stores come out with their Feb-May quarterly earnings. I don’t expect much good news, but analysts have reduced expectations so much that some may record a beat.

I’ll take a look at them a parse the underlining take away.

The rollercoaster that is bitcoin

As I said on Wednesday, I do not advocate people use bitcoin as an investment.

Now I am not pumping bitcoin as an investment, I am using this as a new economic index to assess currency markets. I stress bitcoin is not an investment, since I do not think there is enough liquidity in the marketplace to make it safe for your future needs, due to volatility and perhaps hacking of bitcoin wallets.

It’s way too volatile as witnessed by yesterday’s $200 a bit drop over a few hours. And since it trades 24-7, you may not even know about the crash until you wake up.

The reasons behind the massive sell off has a few options. One is that the gains the last three coindesk-bpi-chartweeks have been huge and there needed to be a sell off to move higher. This is the old trading adage that no chart goes straight up.

Secondly, like the bitcoin crash of 2013, a Chinese government crack down is feared since the country accounts for a majority block of the trading as a means to move money out of the country, while also preserving wealth against a weakening yuan against the dollar. Nevermind that the yuan has a loose peg to the dollar, Beijing has been clamping down on both the exchange rate and the availability of yuan liquidity of the same time period of the last month.

At 5am EST on Thursday bitcoin was trading at $1,149, a mere 24 hours later it is at $940 level. The downside can be harsh, but the crypto-currency is still positive for 2017. That’s how fast it can move.

So caution to all and if you choose to get involved use capital you can stand to lose and wait for a bottom to be formed before jumping in.

Happy Bitcoin New Year

Each morning for the last three weeks I awake around 5:15am and take a look at the overnight action in bitcoin.

And I discover that the Chinese buyers have taken the crypto-currency up another $50. Then during the US trading day the price takes a bit of a hit or stands still until the evening hours when it begins to rise.

This morning the bitcoin price hit an all-time high of $1,087. Since bitcoin never stops trading the chart shows a big uptick since Dec.10 of last year when China admitted it needed to adjust its currency — the yuan. The fear of additional capital controls and the yanking of yuans from the economy to strengthen the currency have been the driving force behind the latest bitcoin moves.

Since Oct. 1 2016, the price of bitcoin has soared 44%. But since Dec. 20 it has risen 26.5%.

Now I am not pumping bitcoin as an investment, I am using this as a new economic index to assess currency markets. I stress bitcoin is not an investment, since I do not think there is enough liquidity in the marketplace to make it safe for your future needs, due to volatility and perhaps hacking of bitcoin wallets.

I have been in bitcoin for some years, but only as a niche play. Remember that the US government has a substantial stake as a result of the Silk Road prosecution, so it can sell off its stake to stifle price growth. However, once that move is made, there is no options or futures market that can be manipulated to alter pricing. Not yet anyway.