BTCUSD crypto short triggers and hedge
Updated
I personally don't like short positions, especially with BTCUSD pair. However there are a few triggers that may cause crypto market to fall.
1. Stock market fall. Nasdaq has touched its ATH. And it is a strong resistance level.
2. SEC can delay spot bitcoin applications again. So January 2024 is a very important month.
3. Last week BTC recorded $ 860 million worth of net inflows into crypto exchanges (accoording to IntoTheBlock analytics company). If we count this amount in BTC its not much, just about 20 000 BTC or 0.1 % of all current allocation.
But we don't know how many bitcoins have been sold in OTC market. Big players always hide what they do.
If all three triggers work together, the crypto market will be down. That is why I'd like to discuss how to hedge your long positions.
The best way to hedge our investments is to see what institutional crypto investors do.
Accoording to Coinshares YTD BTC flows is ~ 1.7 Billion while BTC short is ~ $ 62 million.
Here is how to count the size of our hedge short position. To divide: 1 700 000 000 / 62 000 000 = ~ 25.
So If we want to hedge long positions in the bull market our profit / loss ratio should be 25 / 1
For example if you have invested in BTC, say, $ 100 k, your short position in BTC should be = 4 k. But I strictly urge you, don't open margin positions. x1 is a must (not x2 or x3) in crypto futures.
If you open x1 short BTC position now, your liquidation should be at ~ $ 80 k for 1 BTC. But if 1 BTC = $ 80 k , you have ~ $ 200 k ($ 100 k in profit) and you lose only $ 4 k.
That is very profitable, isn't it!
1. Stock market fall. Nasdaq has touched its ATH. And it is a strong resistance level.
2. SEC can delay spot bitcoin applications again. So January 2024 is a very important month.
3. Last week BTC recorded $ 860 million worth of net inflows into crypto exchanges (accoording to IntoTheBlock analytics company). If we count this amount in BTC its not much, just about 20 000 BTC or 0.1 % of all current allocation.
But we don't know how many bitcoins have been sold in OTC market. Big players always hide what they do.
If all three triggers work together, the crypto market will be down. That is why I'd like to discuss how to hedge your long positions.
The best way to hedge our investments is to see what institutional crypto investors do.
Accoording to Coinshares YTD BTC flows is ~ 1.7 Billion while BTC short is ~ $ 62 million.
Here is how to count the size of our hedge short position. To divide: 1 700 000 000 / 62 000 000 = ~ 25.
So If we want to hedge long positions in the bull market our profit / loss ratio should be 25 / 1
For example if you have invested in BTC, say, $ 100 k, your short position in BTC should be = 4 k. But I strictly urge you, don't open margin positions. x1 is a must (not x2 or x3) in crypto futures.
If you open x1 short BTC position now, your liquidation should be at ~ $ 80 k for 1 BTC. But if 1 BTC = $ 80 k , you have ~ $ 200 k ($ 100 k in profit) and you lose only $ 4 k.
That is very profitable, isn't it!
Note
It is better to open BTCUSD hedge short position in the range of $ 40k and $ 50 k. The higher the better, because your liquidation will be higher and you will have more profit if the crypto market is down. The higher you open your short position the better in both ways.Trade active
I opened my x1 hedge short position BTC Perpetual/USDT at $ 42 664. Since bitcoin can go up to $ 48 - 52 k in the nearest future, I left 50 % of my hedge money for that price to make my short position stronger.My liquidation now is at $ 85 k for 1 bitcoin but if I'm liquidated at $ 85 k, I will have huge profit from my long position. I urge you again - don't open margin short positions in the bull market. You can have big loss if you do so.
Note
Here is a question. What can be with your short position if bitcoin goes higher and hits ATH? Moreover bitcoin can cost at last $ 100 000 . The sweet number all bitcoin hodlers have been waiting since 2017.My short bitcoin position will be liquidated. But since I opened it in the bull market and my profit / loss ratio is 25/1, I will be very happy when my short position is liquidated. My profit is $ 100 k for every $ 100 k I have invested in bitcoin after liquidation and my loss is only $ 4k.
But if bitcoin dumps in the beginning of 2024 I will at least have some profit which I use to buy more bitcoin.
Note
Please, write in the comments who else opens BTC hedge short positions in the start of crypto bull market. And who doesn't open. And why.Note
I'd like to ask you as well, how do you think - will crypto market go down in the beginning of 2024 year (and bitcoin will go under $ 40 k) or we have the great bull run with bitcoin going higher it's ATH?Note
This is my final idea for this year. If there is no "black swan event" there maybe no correction at all and bitcoin price may hit it's ATH in 2024.But also crypto market may be down if bitcoin goes under $ 40 000. Bitcoin can dump to $ 30 000 - 32 000.
That is why I opened my hedge short position and also have some USD (in stablecoins) in my portfolio.
So Happy New Year, bitcoin.
Note
I'd like to tell you the truth. If you open a short or long MARGIN position now, you will probably lose your money.We are in the beginning of a huge bull run. It will start when the USA Federal Reserve System cuts its key interest rate in the nearest future.
There are also rumors that spot Bitcoin ETFs could be approved soon.
Despite everything big players will start collecting liquidity both short and long when the news appear. And they will take your money too. This is how it always works.
However you can still open a hedge short BTCUSD position now using the simple math I gave you before. If bitcoin dumps under $ 40 K you will at least have some profit.
Besides that I also keep 20 % in USD of my all cryptocurrency allocattion (in stablecoins) to buy strong altcoins if bitcoin dumps.
But I keep 80 % in BTC, ETH and other strong cryptos for the following huge crypto bull run.
Note
I decided to sell more bitcoin after the fake news about bitcoin ETF approval. SEC X official account was hacked recently and someone published a message that all bitcoin ETFs had been approved.Actually all crypto is very toxic and manipulative. Especially before bitcoin halving.
Note
SEC USA approves BTC ETFs. Fear and Greed index is at 73. Strong Greed. Usually sales start at this level. But I don't recommend to sell much. If there is no "black swan event", bitcoin will not fall very low. Look at the charts of bitcoin in 2016 year. So it is better to HODL and have a small hedge short position.Trade closed: stop reached
Closed my hedge short position after SEC had approved spot bitcoin ETFs.
My name is Vitalik Shavkunov. I've been investing in crypto since 2015.
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