When Trading Bitcoin, There's Only One Approach to Guide You
Here's my game plan, including two moves in stocks I made today.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
Bitcoin continues to stand out on Thursday, with the iShares Bitcoin Trust ETF IBIT rising about 4% to a new all-time high that corresponds to over $100,000 for the actual coin. Bitcoin miners and brokers mostly reversed after a big open but are still holding up for now.
There is much talk about new price targets for Bitcoin, but there is no way to calculate a target. There is no discounted cash flow, earnings, or balance sheet to analyze. It is pure supply and demand, and apparently, demand is very strong, and those who are buying it expect that to continue. It attracts attention when someone appears on CNBC and announces they will have a revised target for Bitcoin, but that is nothing more than a wild guess to garner attention.
Bitcoin can only be traded based on chart action since there are no fundamentals. Charts are the best way to measure supply and demand and should guide you in how you approach Bitcoin.
The excitement in Bitcoin is not spilling over to the broader market Thursday. Breadth is running about 4,200 gainers to 5,000 decliners, with small-cap stocks lagging once again. The Russell 2000 has filled a gap on the chart and is now back to where it was on November 22.
I was looking for an intraday reversal on Wednesday, but it did not develop, mainly due to Fed Chair Jerome Powell's upbeat comments in an interview. The action looks more precarious on Thursday, with the important November jobs report coming up on Friday morning.
My game plan is to cut a few positions that are not acting well. For example, I closed out the remainder of Uber UBER Thursday morning and cut back my AST SpaceMobile ASTS position due to poor price action. I'm looking for good charts in which to put more cash, but I'm not in a big rush. I think we will see some basing and choppy action as we set up for a Santa Claus rally later in the month.
During December, there are often some very abrupt periods of profit-taking as trades look for gains for the year and prepare for a fresh start in January. There is a belief that many investors with big gains will not want to trigger taxable capital gains, but there are reasons why some people will want to take gains in the current year. Don't read too much into the tax-planning theory.
Bitcoin is starting to fade as I write, but I expect to see strong dip buying in the weeks ahead.
At the time of publication, Rev Shark was long IBIT and ASTS.
