Short Term Trading That’s Dumb in the Long Run
Crypto will tank in January. That’s what the smartest guys in the room are telling me on Twitter.
But I am still long. Let me explain why.
Earlier in the month I wrote a bulletin to my paid subscribers about the Bitcoin spot ETF applications that are under review by the SEC.
I was skeptical that Bitcoin ETFs would be approved to trade in the first two weeks of January, simply because we are dealing with the government, it was Christmas, and no work gets done in the last two weeks of December.
Well, I was wrong.
In the last two weeks, there has been an absolute blizzard of paper-pushing between the SEC and various ETF applicants.
While most crypto-natives think Gary Gensler is at best incompetent and at worst deeply hostile against crypto, I am deeply impressed that he got his staff to work over the Christmas holidays.
ETF approvals might still be delayed until March. But I think the odds are firmly against that now.
However, now that we all know that Bitcoin ETFs are a go for January, I'm seeing the narrative that's it’s time to sell the news:
Already we are seeing a crowd heading for the exits, as it was a bloodbath for Bitcoin public miners on the last trading day of the year:
The short-sellers should be happy, as about 17% of Riot's public float has been shorted.
Today, an impressive 58 million shares traded hands on a public float of 195 million shares
On the other hand, the short still have a way to go before they dig themselves out of a hole.
https://twitter.com/mikealfred/status/1740522805438095685
For the record Riot is still up 16% for December.
But it looks like January will be a down month. Everybody says it will be, and judging by the trading action of today, the "smart" money is already leaving.
But I am still long, and here is why:
Let’s take another look at Riot Platforms, one of the stocks that I have in my portfolio. It’s not the best performer by far, but it’s has a five-year trading history:
Honestly, looking at that chart, who cares what happens in the next thirty days? I have yet to read any article or Tweet that makes any type of convincing case that Riot is going to be lower than $15 by the end of 2024.
Does it have a chance to hit $60 again? Oh my, yes it does.
So who sold it today? Let's take a guess:
Professional traders working with other people’s money need to look smart at the beginning of 2024. Of course, they are now at risk of trading themselves out of this market (again).
Tons of investors are yet to invest in crypto because they are waiting for a "pullback." I know this to be a fact because I talk to a different one each week.
And when there’s a pullback in January, they will pat themselves on the back for not buying, forget about crypto again, and go back to "what they know," which is some NASDAQ stock that has maybe gone up 15% in the last four years.
I think there will be one last correction. One last round of hearing the "boo-birds" on social media dumping on crypto.
Then the great big media marketing machine of Blackrock, Fidelity, and everybody else will start to ramp up, and away we go.
This January, I plan to go on a beautiful hiking vacation in Sedona, Arizona. And I hope to not look at the trading screen very much.
DJ