Market Turns Bearish As Futures Trading Approaches

Bitcoin went on an epic run from $11k – $20k, then declined as alts rose. Today the market is bearish as futures trading approaches. This could all turn around at some point, but for now, this is where we are at.

Don’t let the volatility throw you off your game though. One can’t last a week in crypto if they react to every little or big move. If you are part in fiat, consider buying the dips or doing a little careful swing trading with a small portion of your fiat. If you are in crypto and don’t have gains, consider holding (or carefully swing trading).

In other words, the crypto market, despite it being a wild ride as always, is generally up a lot in the past week, but is most certainly seeing some temporary downturns.

Here is an overview of the week to better illustrate what I mean: Bitcoin’s growth blew the collective minds of the world at the start of the week, unfortunately it also suppressed alts. Then yesterday (Friday) alts came back to suppress Bitcoin.

Now it looks a bit like all coins are seeing some panic selling today, Saturday, as futures trading approaches on Sunday.

This is not the sort of thing you want to react to by selling in a panic (anymore than you want to buy at the top after an epic run). Instead, you want to buy the dips, take profits on a bull run, and otherwise hold tight and enjoy the ride.

It is very likely that this isn’t a crash, but rather is a quick forcing down of the market spurred on by those who sold high in order to buy more lower so they can cash in on futures trading. The idea being that new holders will be quick to sell off their new coins and then buy back in filled with regret later in the week or month as Bitcoin and alts rise to new heights.

If you react to the game, you get played like a pawn. If you hold to a solid strategy, you become a player.

Now why do I say the above with such confidence? It is because this is somewhat typical for Bitcoin, big highs that come quick, big lows that come quicker, followed by even higher highs. Everything down to the odd relationships with the alt market is old news at this point. It happens on a monthly basis.

It helps one understand the value of being in all coins and taking profits when you see them, then buying back in on a dip or stagnation (as opposed to chasing the coin that is moving; unless you catch it early).

At this point we could see some growth today, but mainly we should keep our eye on what happens Sunday and not react to whatever the market is doing (unless our reaction is buy low, sell high…. although you are very likely to mistime highs).

The main thing to keep in mind here is that Sunday is when futures trading begins. There is this idea that once futures trading starts the market will crash and the banks will short Bitcoin into the ground.

Or, there is the idea that Bitcoin’s current Saturday slump will be the end times and the crash will come before futures trading even starts.

These ideas is full of holes and are likely just pure FUD.

If futures trading does manage to suppress or depress Bitcoin for any substantial period of time, it isn’t going to happen day 1 (and certainly not day -1).

Meanwhile, there are scenarios where futures trading brings a wave of new money to Bitcoin, which then flows into alts. This is the most likely scenario in the short term (after whatever correction is happening today stops)… We must keep in mind, you cannot short something if it is already at zero!

However, what you can do is bring Bitcoin down right before futures trading starts, then bet that its going to go to $25k by Christmas. You can do this, and this is likely what people are doing. If you sell low, this is then being done at your expense. If you refuse to sell, you are forcing those trying to pull this off to spend more of their own money and making their life harder.

To reiterate the idea that futures trading is not going to result in the end of days on the day it starts, let’s think about the plot of the movie the Big Short (and the real life housing bubble and financial crisis of 2007 – 2009).

I don’t know if you saw the movie “the Big Short?”… but, like with Wolf of Wall Street (he goes to jail after the lambos) or with Scarface (he dies at the end… after the lambos), it isn’t a happy story.

Fans of these movies tend to have selective cherry picked memories about them, using the anti-heroes as icons of what it means to be successful (completely ignoring the tragedy and horror of 90% of the plotline).

What happens in “the Big Short” (the movie and real life) is the guy predicts the end of the housing bubble a good year and a half early and then loses hundreds of millions of others people’s money shorting the housing market. Then, long after the crash was supposed to happen on paper, it finally does, and that is where the guy makes billions (ish)… all while the banks and insurers collapse and borrow $800 billion from tax payers and cause a global panic.

That is what we are up against here, don’t worry too much about what happens today (if anything, buy the dips, don’t panic sell, and don’t chase gains; there will be more stable and predictable days for trading).

Now all that said, futures trading isn’t exactly the same as shorting the housing market, and it could result in some positive things (like bullish price projections that come true and reward everyone).

However, to what degree this could have the same effect as the Big Short, first things first, likely what we will see is waves of new money coming into the market for months as prices inflate.

Bitcoin could be $100k, and people could be out hundreds of leveraged millions for months if this plays out anything like the movie / real life.

Then, when it seems like the bears were wrong. When we all laugh at them for being so foolish as to spend 2018 (maybe 2019) shorting Bitcoin (essentially). Then at that point you’ll want to start looking out for this crash that some people think is happening this weekend.

Still, even an epic crash or correction or two for Bitcoin hardly spells the end of cryptocurrency. I mean, Bitcoin has corrected by 80% or more (from $8 to $1 for example) and bounced back. You likely don’t want to ride down a future correction from heck with all your investable income… but that is why you want to only invest a portion of your investable income in crypto, always leave some of that money in fiat (taking some profits when you are up), and keep the rest long even though gnarly corrections (AKA “hodl”).

Just be smart and conservative with your investments and you’ll be fine. You have to shrug off days like this or you won’t last in this market.

In other words, whatever you do, don’t let a few thousands dollars drop or spike today throw you off your game.

Yes, it could all end today… but more likely it is going “up, up” before it goes “and away.” Likely the next phase is that we some bullish futures (people betting on really high prices with big bets) and some bears lose their shirts by betting on low prices.

To the extent Bitcoin is in a bubble, you have to keep in mind that these things don’t pop when you expect them to. If they did, we would all be rich. First they punish everyone (bears and bulls) throwing out rewards and punishments like a random number generator. Hold through the punishment, and collect your reward.

The only thing that feels worse than losing money on paper is selling low and then having to explain to your friends at Christmas that you no longer have the $25k Bitcoins you once did while you are showing them how Coinbase works.

NOTE: Clearly it could all end tomorrow as easy as it could never end. You shouldn’t read this article as investment advice and react based on it. Ultimately you’ll need to do your own research and make your own choices. If your choice is to hold and buy the dips while keeping some money in fiat, then let us just say, there are far worse choices in the world.

Author: Thomas DeMichele

Thomas DeMichele has been working in the cryptocurrency information space since 2015 when was created. He has contributed to MakerDAO, Alpha Bot (the number one crypto bot on Discord),...

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