Bitcoin has no fundamentals.
It serves no economic purpose.
In time, investors may see it has no value, and the market will just disappear. That may be possible, but we won’t know for years.
In the meantime, bitcoin is a trade.
Traders don’t make value judgments.
In this case, they don’t decide if bitcoin is useful. They also don’t try to justify the current price, whatever that may be.
Traders look at a chart and decide whether they should buy or sell.
This Chart Points to Bitcoin
Based on the chart below, bitcoin is an excellent trade.
The black line shows 20% swings in the S&P 500. It reverses direction every time the Index moves up or down by that amount. The blue line shows 20% swings in bitcoin.
20% Swings Mean It’s Time to Trade Bitcoin
There are many more swings in bitcoin. Each one is a new trading opportunity.
The chart also shows that down moves are often fast. In 2020, the down move in the S&P 500 lasted a few weeks.
For bitcoin, some of the down moves last only a few days.
This is important for traders.
Perfect Time to Trade Bitcoin
This chart confirms what experienced traders already know: Markets tend to fall faster than they rise.
If traders act quickly, they can make large profits as prices fall.
It’s true they could hold and hope that prices go back to their old highs. That happens most of the time.
But that’s not guaranteed.
Traders can profit even when prices don’t bounce back.
While bitcoin is a great market for traders, not every investor will want to own bitcoin.
Now, they don’t need to…
BITO Bitcoin Strategy
ProShares Bitcoin Strategy ETF (NYSE: BITO) tracks the price of bitcoin.
It trades just like a stock in a standard brokerage account. Options on BITO make it possible to benefit from up and down moves in bitcoin.
Bottom line: If bitcoin is falling, a BITO put option can profit. BITO calls allow traders to participate in up moves.
I recently shared my new research on how BITO can be traded. My strategy returned 43,000% in a seven-year back test.
And my subscribers just locked in their first 100% gain after only two days! I expect more gains like that in the future as well.
To see my brand-new strategy, click here.
Michael Carr is the editor of True Options Masters, One Trade, Precision Profits and Market Leaders. He teaches technical analysis and quantitative technical analysis at the New York Institute of Finance. Follow him on Twitter @MichaelCarrGuru.