Greetings,
I will be starting a series that I've created in separate options trading subs however I think this subreddit is the most appropriate and relevant for what I've been doing for the last couple of years.
For some context, I've been bullish on Bitcoin since the March equities crash in March of 2020. I expect to remain bullish throughout 2021 as 2020 is the halving year for Bitcoin and in historical cycles the supply shock from the reduced amount of Bitcoin causes rapid and parabolic price appreciation in the year after the halving. Combine this with the fact that central banks around the world are printing trillions of dollars we have ourselves a great recipe for success for some juicy Bitcoin profits. To add, one more bullish indicator has been the level of institutional investment that has been a landmark achievement in the waiting for many years.
Summary:
The week of 1/11/21-1/15/21 was choppy to say the least. The US equities markets completely tanked after Biden's talk of the $1.9T stimulus package which includes $1.4k checks for American citizens. The equities markets reacted poorly to the potentially higher taxes triggering a sell off which cascaded into the crypto markets on the 14th.
Bitcoin breakdown:
After the -30% correction down to $30.5k I took that opportunity to load up on Bitcoin long calls with a calendar spread - this play actually worked out perfectly as intended as Bitcoin bounced back to $40k. My positions and PnL are below. As of 1/17 I'm not in any large positions since price action seems range bound from 33k to 37k (give or take, Bitcoin could easily wick to lower 30's or jump to higher 30's). Unless major news comes out about an institutional buyer, or some other larger macroeconomic catalyst, I expect volatility to subside for this upcoming week. (Please keep in mind that this can literally change at any moment, depending on the news cycle). A major news event to look out for is the ongoing Tether "investigation" from the NYAG. The legal documentation had been submitted as of 1/15/21, but I believe it will take some time for them to review the documents before making any decisions.
Ethereum breakdown:
Since the OCC announcement, Ethereum looks like it has just been itching to break new ATHs. ETH price action reminds me of December 2020 when BTC was knocking on the door for new ATHs. It seems like a gravitation pull upwards for Ethereum as DeFi continues to grow at an immense rate and combined with ETH holders staking in ETH 2.0 - to me, it smells like a recipe cooking for new ATHs. I've been building long call positions for the next leg up which have been already juiced up due to volatility increasing since I entered these positions (these are all still open). I took a decent amount of profits from the previous leg up when we shot up about 40% which is why you see some positions with smaller sizes below 5. I'm letting these positions ride into expiration. If all else remains equal, I believe there are strong tailwinds from this OCC news on a very long-term macro view for Ethereum. In the short term I think we'll be chopping along with the equities markets. Similar to Bitcoin, this view can completely change depending on the news cycle or if some institutional investor announces a large investment.
Happy heisting!
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