Let's take a look at the daily chart of Bitcoin Investment Trust (GBTC).
I have to say it has been boring 2 weeks. GBTC is trapped in between the 50-day moving average (1) and the 20-day moving average (2). This situation gives us two obvious choices:
- We will buy the issue as soon as it breaks above the 50-day moving average.
- We will short the issue as soon as it breaks below the 20-day moving average.
Which direction do you think GBTC will break, up or down? If we can rely on the long-term trend, the upside breakout is more than likely. Take a look at the 200-day moving average (3) which indicates the long-term trend. It is rising. Of course, the long -term uptrend does not promise GBTC will resume its uptrend. But, as long as the long-term moving average is rising, buyers are still hopeful and optimistic.
Here's something bothering me.
The chart above is from StockTwits. It shows the current sentiment of GBTC. As you can see, the bullish sentiment is 95.06%. This is way too optimistic. As I stated, if I use the long-term trend as a guidance, we can expect GBTC to break above the 50-day moving average. But, this wildly optimistic sentiment makes me hesitate to take a long position. It is commonly understood that taking a contrarian view to crowd sentiment is beneficial to your trading.
