Four days ago we projected BTC to hit $12,500, and indicated that it was my first target. Well, it took off so fast that it reached my two other targets, surpassing the latter one by 7%. By now I have locked 60% of the profits. The question is what to expect from the remainder of the position?
At this point I have rather bearish expectations, and there are a couple of reasons for that.
We had a 40% run from the low of Nov 29th correction. And that is a lot. There are still buyers, and thus we recommend taking some money from the table. It might continue skyrocketing, but the recent event proved that if it does not, things will go ugly pretty quickly. Once again, there is a big difference between paper profits and realized ones.
Bitcoin futures are right around the corner. On Dec 18th CME Group is launching trading of first ever Bitcoin futures. If you hold BTC you probably heard a lot of favorable arguments, with the most prominent one being “Eventually, we will see the fair [of course the expectations are above sky] value of Bitcoin”. A note of cautiousness here: do not fall prey to the confirmation bias. That is to say, apart from a great upside potential, futures market will bring a lot of short sellers to the market of Bitcoin. We have seen profit taking to push the price more than 30% down. Now imagine what might happen when there is a pool of deliberate sellers. And you know for a fact that there are a lot of proponents of the “Bubble Theory” who are waiting to take their chances.
All in all, as we will approach Dec 18th I will keep less BTC in my portfolio, given that it does not hit my stop. For those who do not hold BTC we would recommend to stay cool, observe price action and expect a correction.
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