Concerning the present market and determining where we are headed going forward, I believe the most telling bit of information is the next major decline the market experiences. From my prior post, I outlined a situation in which an ETF approval determines much of the market going into late September and early October.
I personally favor these ETF's will be declined. One reason for a rejection of the ETF's by the SEC is that the SEC does not view this situation according to their rules, but according to how they will be viewed as an organization if they approve a crypto ETF. This is evident in the dissenting opinion given by an SEC commissioner, who is basically saying that the rejection of the Winklevoss ETF is not in accordance with the standards the SEC has set for other approvals.
What this essentially means is that whatever facts are presented to the SEC are irrelevant to the approval of a Bitcoin ETF. The SEC wishes to reject the ETF because of public perception of their organization, not because of whether a Bitcoin ETF presented is done legitimately or not. One of the primary roles of government is to cover its butt when it comes to looking bad in the light of public perception.
Imagine if the SEC approved the Bitcoin ETF, and then the Bitcoin network failed? Does it matter to the public that the SEC never approved Bitcoin as an investment, but simply evaluated the rules for approving an ETF? No. The public would look to the SEC for this failure. The SEC knows this, so rather than evaluate Bitcoin ETF's according to the standards they have set, they are taking the cover-your-butt approach to addressing cryptocurrency ETF's.
Governments do this in a variety of situations spanning history. It is a common behavior, and given the incentives a bureaucracy is presented with, I do not really blame them for it.
If I am wrong about this, then great, we have a Bitcoin ETF bull market. We just all go long at that point and have the easiest time making money. This is an easy thing to be wrong about because if I am wrong about this, we all just stand to make tons more money. What matters though is if the ETF is not approved because then we are trying to evaluate a hazier situation in the short-term.
ETF Not Approved? - Short Term Questions:
Will the bull market continue into winter even if the ETF's are rejected?
Will there be a crash back down to 6k or will it crash lower?
For me, these questions are all answered by the next major decline following the rejection of the CBOE ETF in August (assuming it is rejected.)
When this decline occurs, we watch the market's behavior and when we think this decline has stabilized, this will tell us a great deal.
If all the ETF's are rejected, and the market stabilizes at 7k without a retest of 6k, then I view this as bullish, especially if it is heading toward breaking previous highs from the ETF anticipation rally. At which point, I might expect a bullish market into December.
Yet if the decline wants to stabilize around 6k, at that point we have to ask whether there is a breaking of the prior lows? Maybe those hedge funds betting on ETF approvals generate enough selling to break us down further in valuation.
I would rather buy late into something I believe is a bull market. Rather than buying at 6k into something that is a continued bear market. If I am rebuying at 8k, I think this is fine if it is a bull market. If I am buying at 6k and am totally unsure what the market is doing, this does not register well with me because the market could just continue down.
CONCLUSION:When the market declines, we want to watch it closely. If we are forming a genuine market decline that is really just a higher bottom than 6k and it stabilizes. This could be very bullish going into late 2018. If we plop back down to 6k, this could either be bullish or bearish going into late 2018. The 6k retest is indicative of a slower market going forward that may take more time to restart into an actual bull market.
If prior low around 5,800 breaks, we need to establish a new baseline of support before we have a bull market.
Published on
by crypto-investor
