My baby letf me

Market Report: 7th Dec. 2018 — Subscribe to our newsletter.

OUR TWO SATOSHIS

The Decembear view from our desk.

Our future robotic overlords have drawn more blood in the inevitable AI takeover. In what appears to be an ongoing skirmish, robots at an Amazon factory sprayed bear repellent at unsuspecting workers. Perhaps the 02 shortage was just a smoke screen! Oh well, let’s ignore the issue and take a leaf out of Churchill’s book and drink unlimited alcohol, tis the season.

WE’RE NOT FLOATING INTO SPACE

The cryptosphere starts smelling of capitulation, but is this the dark void yet?

If you’re reading this, it’s likely your price alarms — or bearish friends — informed you of the new yearly lows. If not, note the top 100 projects followed bitcoin’s 11% dump and lost 13.2% on average over the past 24 hours. One could say it feels like last December’s bull run, but this time the high percentage moves are negative. Still spectacular, still potentially profitable, and still exciting for a group of traders — rogue bears.

But, as dumping emotions get out of control, what could an absolute bottom look like? It’s all about trapping those who now feel shorting cryptoassets is a guaranteed trade. Credible Crypto reminds BTC shorts on Bitfinex, the largest exchange which provides such data, are nearing an all-time high. And ETH shorts have also just broken a record. This is the perfect fuel for a short squeeze — a trap well explained in this video — which can be difficult to time, but that can surely mark a fast reversal and an end to this bear euphoria.

MY BABY LETF ME

What happened today shouldn’t surprise you — so don’t act like Elvis Presley

So, what happened? During this week, we’ve noted the weak response non-bears gave to the continued retest of the 25th of November’s local bottom. By 2pm yesterday, a similar bounce failed to occur, and for the next 11 hours bitcoin held tight for its dear life. That constrained range was the perfect opportunity to cause a dump, and by 11h30pm, the original cryptoasset fell 8% — marking the new temporary low of £2.6k ($3.3k).

Many blame the expected SEC delay of the VanEck Bitcoin ETF for the dump, but unsurprising order, which arrived two hours earlier, was already priced in. As Jake Chervinsky explains, that decision can’t be postponed anymore, and the final date is the 27th of February. Meanwhile, the weekend promises to be fun. The next few hours will indicate if we’ll see some relief, as visualised by the Crypto Monk, or if Josh’s magnet, shown in the chart below, will attract bears into the final battle with the surviving bulls.

tweet by @Josh_Rager

WHAT YOU CAN’T MISS TODAY

Don’t leave for the weekend what you should read today

▪ If you’re curious about the short squeeze scenario, follow Marvin Chebbi’s to visualize how the last ones played out. Note the scenario doesn’t imply a full reversal.

▪ If you’re looking to know how to discern a good bottom call from a bottom bet, consider @Tradermayne’s suggestion that “until we see higher highs the bottom ain’t in.

▪ If you’re longing for some bullish inspiration, note Morgan Creek Digital, a cryptoasset management fund, is betting $1 million that their index will outperform the S&P.

▪ If you’re waiting to find the must-read of the week, check David Truong’s essay ”on bonding curves and charitable giving”. Contributions to the model accepted!

▪ If you agree that “price isn’t the whole story”, ConsenSys just provided a “a closer look at the hard facts behind the Ethereum network” here. Do you agree with it?

▪ If you’re confused about the latest mining trend, Vision Hill Research has your back in “modeling Generalized Mining from a fund’s perspective: A Livepeer case study

QUOTE OF THE DAY

Unless you know what you’re doing, be wary of trying to trade the bottom

“Bottom fishing is one of the most expensive forms of gambling.”

by Martin Schwartz, in “Market Wizards: Interviews with Top Traders”