They sure no how to create a story.Call me dumb, but I still don’t fully get bitcoin and all the stuff in what is the «storyline» for the cryptocurrency. Mining, block chain, use of nVidea chips, limited supply, Bitcoin, Etherium, etc.
Now I read about bitcoin gold which is a «new fork of the bitcoin software».
Here is a blurb from something I read online at coindesk.com:
«In an interesting twist on a typical distribution, a number of exchanges are now listing a token that represents a claim on the future delivery of bitcoin gold (in advance of it becoming available to all bitcoin users). Ahead of that event, however, traders are seeking to value the asset, which proposes an alternative to the difficulty of competing for rewards on bitcoin’s mining network.
Still, it’s safe to say there’s disagreement so far.
In interview, analysts expressed a reservation about bitcoin gold, both when speaking about its developer team, and when characterizing the protocol’s potential market opportunity.
Safiri Felix, a researcher at financial publisher Empiricus, for example, believes that while bitcoin gold is likely to encourage others to clone bitcoin’s blockchain, and thus capitalize on the potential to appeal to its expansive user base, he sees this trajectory as limited.
Felix told CoinDesk:
«I think that forks and airdrops as a trend to launch new tokens [will continue], aiming to get an instant user base. Best case scenario, bitcoin gold is a potential contender for litecoin.»
Oh my….It is at this time that I — and perhaps others like Jamie Dimon and Saudi Prince Alwaweed — start to put up the red flags signaling SCAM.
I don’t know… I thought bitcoin was this limited supply of «bitcoin» thing, that is mined by solving some algorithm. If solved, you get a bitcoin in your wallet.
Now, as if that story seems fishy, they talk about «bitcoin gold» (even though it is not gold as we know gold) as a «new fork» and «litecoin» and god only knows what else.
Like I said, call me dumb, but I would rather be dumb vs a sucker.
Anyway, what I do know is there is an instrument called bitcoin. It has a price. The thing trades at some broker. Bloomberg has charts of the price. I can apply technical tools to that price action. Traders do trade it. It is up 500% this year and as long as your not the last guy standing, you can profit from it either from the long or short side.
You can also lose a lot if it is the scam that some/many think.
The goal, if you are to trade it, is to determine a technical bias and trade that with great discipline. Failure to «listen to the market» (i.e follow the technical bias) could lead to the «Big One» (that is the really big fall). I don’t doubt many have made money. The goal is not to blow up.
With that said, looking at the hourly chart above, the cryptocurrency fell below the 100 and 200 hour MAs in yesterday’s trading. That turned the bias back negative. The fall yesterday fell below a trend line as well (bearish if stays below). The price did not stay below and a correction began.
That correction yesterday stalled against the 200 hour MA (green line in the chart above), and fell again. This time, the low could not get below the earlier low. HMMMM. Sellers tiring?
Today when the price moved back above the 200 hour MA (green line), the sellers turned to more buyers. Eventually the price spiked back higher and moved away from the 200 and 100 hour MAs (green and blue lines). The move above is more bullish.
If trading bitcoin, you have to set your bias tools and listen to them. For me, it is the 200 and 100 hour MAs. I will also use trend lines and fibonacci retracements (and also look at 5 minute and daily chart).
A lot can be told about the «story» from the simple hourly chart. Just use the tools to determine bullish or bearish. It is that simple.
If the price whips below and then back above, that is ok. The day may well come when it falls below and does not bounce for a long time….If you trade near the technical levels, you won’t lose a lot if you don’t take profit. You can also go long on a move back higher.
So the story for bitcoin adds another chapter with bitcoin gold, and that makes me raise an eyebrow. Nevertheless, the price action and tools can still be used to define and limit risk. Listen to those tools. They will tell you what to do if you are trading bitcoin.