Sunday, July 30, 2017

Reading the Tape #Bitcoin $GBTC

Reading the Tape
Traders read the tape - ticker tape in the old days to determine the recent buying and selling pressure. Here lies the importance of volume. It's easy to spot a large buyer or seller when the volume is light. Big buyers usually enter before big moves.

Jesse Livermore read the tape and never fought it.

Of course there is always a reason for fluctuations, but the tape does not concern itself with the why or wherefore. It doesn’t go into explanations. I didn’t ask the tape why when I was fourteen, and I don’t ask it today at forty…, Reminiscences of a Stock Operator.

While the tape, often triggered by price in reaction or anticipation of the new flow, is triggered by price, it's fueled by force. Volume is the domain of force. Traders/investors must learn to read the force behind the trend.

Subscriber Comments

The discussion of innovative investments brings me to Bitcoin, Ether and other digital currencies. I’d guess these things have arisen from the intersection of (a) doubts about financial security – including the value of national currencies – that grew out of the financial crisis and (b) the comfort felt by millennials regarding all things virtual. But they’re not real., Howard Marks Oak Tree Captial

Most regular readers know my stance of cryptocurrencies - they're trading vehicles at least right now. They could be alternative currencies. History is full of them. Cyrptos, a derivative form of money that has existed many time throughout history (sorry Bitcoin you're not the first), could become a major currency if confidence in government collapses. To understand the role of cryptos, you must understand the role of inelastic and elastic money. The former is the US dollar or similar. The later, instruments that appear to arise out of nowhere, expands the money supply to meet the sudden increase in demand for cash during a crisis. The tendency of humans to hoard cash during a crisis usually translates into a sharp contraction in supply. Cash alternatives, a definition which may include cryptos in the next crisis, fill the void. Many things have filled this role throughout history - cashier's checks, certificates, local scrip and tokens, and so on.

Bitcoin remains an aligned up impulse for 112 weeks (chart 1 and 2). This is bullish. The deterioration of volume (LTREV) ahead of price (LTCO) defines waning upside force within the trend. This warrants close attention from the bulls betting everything on higher prices.

Chart 1 Bitcoin Investment Trust

Chart 2 Bitcoin Investment Trust PREV Table


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