You saw it. I saw it. Bitcoin went flying by THOUSANDS of dollars on the evening of October 23rd. Indeed, over the course of just a couple of weeks, it added about $10,000 of value per Bitcoin. . It’s like we’re back in 2021!
In the midst of all this exuberance, I would like to point out an important trendline which is anchored to December 30, 2022. This line was broken with some gusto on August 16, 2023, and in the ensuing months, it has slowly healed itself and clawed its way back to the underbelly of the trendline. In my estimation, this is a price point that suggests exhaustion, not opportunity.
Besides the retracement to the underbelly of the trendline, kindly note we’re almost at the 50% level over a long-term timeframe. This Fibonacci sequence spans December 15, 2018 to November 10, 2021 (its lifetime high). We are almost to the 50% mark.
Based in this explosive move higher, I’m putting a stake in the ground.
To be clear, I’m not shorting BTC directly. I stopped trading my crypto account in late 2021 and have been focused on directional options trades based on equities since then. Thus the question is: what equity presents an intriguing opportunity to take advantage of the supposed forthcoming weakness in Bitcoin? There are a variety of stocks including brokerages (COIN) and holding companies (RIOT, MARA), but I’ve decided to go for a richly-priced security which has been around for decades: Microstrategy (MSTR).
My trade is not a sophisticated one: I have purchased in-the-money puts with a fair amount of time left on them. Specifically, I have gone long January 19 2024 puts with a strike of $450. The bid/ask isn’t too bad (about 2%), and with almost 90 days left until expiration, there’s plenty of opportunity for the exuberance of BTC to hopefully settle down.
I can only hope my projection turns out better than some better-known market observers.
