Many wonder whether Bitcoin is a buy, sell, or hold. Obviously, for long term investors, Bitcoin is always a HODL. However, many prefer to play the waves to grow their wealth over time.
In this example, I use GBTC which is Grayscale's Bitcoin fund. It is slightly different from the BTC futures but not enough to warrant changing the view.
As always this is not financial advice but a tool to education people about some of the different trading views out there.
Here is a simple trading strategy that I often employ to show triggers when to buy and sell.
Here is the GBTC chart as of the close of trading today.
I use the 5 and 13 day EMA to provide me with my confirmation. Bear in mind no trading strategy is 100% so we have to account for false signals.
According to the parameters, the 5 day has crossed over the 13 day on the upside, offering a bullish signal (buy).
If we look at the past results, we see how this approach can provide good entry and exit points. There was a false signal a few months back around $7.10 that was rectified a few days later. We could have rode that all the way to the next signal, which would have gotten us out at around $11.
Now we have a crossover to the upside. If this opens up higher in the morning, it would be worth entering on the long side to take advantage of the next (anticipated) leg up.
Of course, if there is an entry and the 5 day crosses back over the 13 day, providing a bearish signal, we simply can exit the trade with minimal loss.
It is best to be cautious as we are on a downward trend that was established over the last couple months.
Buy and hold can be a very profitable strategy in those assets that run over long periods of time.
However, with all assets, whether it is cryptocurrency or stocks, there are ebbs and flows in market pricing. As we can see from this chart of GBTC, there are buy and sell opportunities which can end up being more profitable as the waves are ridden.
The key is to avoid the huge draw downs that happen periodically. Even when looking at holding something long-term, i.e. years, why ride the price of an asset all the way down to the bottom.
For me, this is one of the simplest trading systems I ever came across. It provides not only the entry points but also gives an easy method to determine when a trade goes against one and shows when to pull the ripcord.
According to the system, it is saying that Bitcoin is a buy.
If you found this article informative, please give an upvote and rehive.
gif by 