Bitcoin Weekly: Dead Cat Bounce?

Every market experiences cycles. They are educational opportunities to understand how to deal with the irrational exuberance bull markets and irrational fear in bear markets. The crypto market is currently squarely in a bear trend. The market still has a lot of the exuberance of the gains of 2017. Price speculators unfortunately get slaughtered in both bull and bear markets. The adults have started taking their respective seats in the crypto markets. It started with the listing of the first futures contract and has continued as more onramps and offramps have been put into place. 
There were some interesting events that we should pay attention to this week:

CME Future Contract Expiry

This weekends bounce is quickly being heralded that the bottom is in for 2018. While no one can fully guarantee anything in the markets, holding majority consensus views is dangerous. It may be coincidence that a major Bitcoin futures contract expired on Friday and we saw a $500 bounce in the price of crypto. Giving how illiquid the market is at the moment it wouldn’t surprise me if a large player closed their short positions and reopened long positions and hedged their position. There was no other news catalyst and the market could easily be manipulated to architect such an event. We should be careful taking positions here without having the adequate stop losses and conservative price targets in place. 

Introducing a16z crypto

One of the leading venture capitalists in the world announced a $300m crypto fund. Chris Dixon and his team are going to be leading efforts in the space. Being early investors in blockbuster hits like Ripple and Coinbase, I would watch their moves very closely. This moves confirms my long term bias that this is a growth category. Given their infancy of the space large price moves are manufactured to shake weak hands out of the markets. I expect greater volatility to continue to the weeks and months. During this period all of the people who had invested in the asset class hoping to make some quick money will be shaken out. Investors like a16z and Pantera Capital are at the same time investing in the companies that will emerge on the other side of this move. 
This is squarely venture capital and requires very high degree of risk tolerance. In the years to come their will be greater stability in the market. However we are no where close to that point at the moment. 

Regardless of whether you bought at the top or have held Bitcoin since it was a couple of dollars. Please construct a plan for your holdings. Play from a position from a strength and adjust your expectations to your time horizons. Speculating on price if the fastest way to lose your capital base. 

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