Market Update: 15 Jan 2020
BTC held its parabolic trend amidst the selloff this week, bouncing right at the 30k trendline support (Chart 1). As a reminder we won’t be reacting until this parabolic has broken on a weekly basis — so any dips still presents buying opportunities to us. We expect that just like the bull trends in the past — the first topping signals will be increased volatility amidst dying momentum (flattening MACD) and finally a broken parabolic. So far we’ve seen the increased volatility, which although already shaking out some in the market, is perfectly consistent with an exponential trend at this stage.
Having said that however, we have now switched completely to selling strangles. The 1w ATM breakeven is a whopping $6500 price range at 140–150% implied, and the end-Feb (6w) straddle breakeven is $15,000! at similar implied vol levels. We think these extremely high implieds are a gift for selling well-chosen strangles outside the support/resistance range, even as gamma might realize very well on certain days as spot oscillates massively within the trend.
We expect this 40–50k level to provide very stiff resistance and the market to be more balanced up here. The levels we’re looking at for calls are 48k & 52k on the topside — levels we would love to take profit on, and 24k & 20k on the put side. As the market coils in a consolidation triangle waiting for the next catalyst, we’re using the 4-hourly TD 9s to guide our short-term trades — which at this stage of 10,000 price swings can prove quite worthwhile.
Previously we highlighted GBTC as too big to fail in our new year update, and the sell-off on Monday/Tuesday peaked at the end of their 2-week fund suspension to new investors. On Wednesday they reopened again and this stemmed the selloff, as ~5k of BTC was added to their fund in just the 2 days since (Chart 3). No doubt GBTC flows will remain the driving force for the market, at least until a US ETF is approved — something which we don’t yet foresee anytime soon.
