Wall Street again play the classic "buy on the rumor and sell on the facts", this time over Bitcoin

Bitcoin collapsed sharply after investors chose to move part of their assets to Bitcoin Cash. To illustrate this rotation, we will only say that Bitcoin's Bitcoin Bit rate has increased 35% over the past 24 hours. Looking at market capitalization, on December 8, when Bitcoin traded around current levels, it was 67.5% of the market capitalization of the entire crypto market. At present, the "benchmark" among cryptocurrencies holds 48.5% of all assets in the crypto market.

Looking at the graph, however, is only one, it is another balloon in the world of finance. Experienced traders always have one in mind when rumors about an asset begin to cover a large part of society and, on the basis of these rumors, take appropriate action. The assumption here is that the crowd is more often unaware of what it invests in.

The classic bubble scenario is to "play" the market, getting the best buy-in and the best possible starting price. If there are people who know how to do that, they are probably walking on Wall Street or the streets of Chicago.

So how do you get to the right time and exit at the right time? Let's see how this can happen with Bitcoin. Let's assume that the cost of one class of assets has doubled in three months. This is something that happened to Bitcoin at the beginning of the year, as levels of confidence in digital currencies began to rise rapidly. Welcome to "Stealth Phase" - the time when the so-called " Smart money.

After another three months, you start to hear more noise. August comes, Bitcoin splits in two and there is another Bitcoin on the market, you feel confused - what's up? The fork passes, the price keeps rising, and adventurous institutional investors start to be interested. Thus, they develop a plan (or all this is just a coincidence): "It would be great to have futures to trade in this asset class." After some time, futures are approved, but prominent bankers, like Jamie Diamond, come up with phrases like, "You gotta be idiots to make money from Bitcoin." Why do they do it? For a better price!

Then a large part of the crowd begins to believe that the era of the big banks is over and begins to buy MORE ... and the price continues to grow. At this point, many institutional investors are aware that the crowd is beginning to consider Bitcoin as a "safe investment" - seeing it will be traded on regulated exchanges.

Beginning in November, institutional investors are already Long on Bitcoin, and most of them start appearances on television, convincing potential investors that BTC is underestimated to $ 10,000. Before you find out more than half of TV shows give Bitcoin 90% of the time your conversations. On the part of brokers, we already have a massive offer of CFD before realizing that this is probably not a good idea.

So far, it seems Bitcoin is waiting for a bright future. Is it so, though?
There is an essential and new aspect of the market. You can now trade Short on Bitcoin! After months of waiting for futures to be launched, there will hardly be a big investor who does not want to hedge some or all of Bitcoin's wallet.

Maybe you already know, but what will be the short positions of institutional investors who are Long from $ 10K until now? In short, they will double their profits at the moment they are selling their real Bitcoin's on stock markets like Kraken Coinbase or Bitstamp.

What is happening today? Bitcoin trades with a 10% drop in a very short period of time, and Asian investors are interfering and buying to save the day. Whether we will see again $ 20K for the benchmark is not clear, but one thing is for sure Wall Street once again played the cards right.

Source: Finance Magnates

Jr Trader Petar Milanov

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