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It’s hard to invest during a crash. You can hold on and take the pain on the premise a market will return to old levels in due course and proceed to improve and that timing is impossible, or you can forget investing and if you have the stomach for it go into trading mode.
It has to be said most people start traders and end broke and the traders that survive often go on to be investors. Traders often go to jail, investors often fly in private jets. There is a reason for that.
However, during a crash an investor can get out or stick it out and that’s about it. Traders on the other hand are in their element.
Markets are very efficient normally but in extreme positions they lose that efficiency and become much less random. Less randomness means the time series starts to contain information that foreshadows the future. Ether
Here is the chart:
Let’s zoom in:
This new equilibrium is a fantastic signal. In summary, it says that when it breaks out of this range it is going to reprice a long way. What most people want to know is direction; is it going up or is it going down? The answer is “‘you don’t have to know if you know it’s going a long way whichever direction it heads off on.”’ I’m a bear so I expect ether to head to $1,000 but if it suddenly breaks up out of this range it could go straight to $3,000.
The current setup is ether is set for a big move from here and a trader needs to watch which direction it breaks in to jump on board. You don’t have to second guess the direction or even try to get the first tick out of the range—the longer ether stays in this equilibrium, the better the prospect of a big jump either way.
Of course, these kinds of setups won’t survive big outside events and trading is a percentage game, so this is simple a set up to watch and for sure a breakdown will signal the beginning of the end of this crypto crash part of the cycle.
I admit to being short of ether for the first time ever but not materially because I’m not a shorter by temperament. I shorted to hedge my ETH liquidity positions then thought why not get past hedged and spice it up a bit? Ethereum transaction costs are down 90% from the price highs of before Christmas. Right or wrong I have always seen transaction fees as a leading indicator of Ethereum’s price.
However, directional calls are one thing, but right now it is simply the next $200 dollar move up or down that will create a high probability direction signal, and anyone brave enough to jump on it can have a go at capturing a $500-$600 move.