Greetings,
I will be continuing a weekly series that I've started months ago 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. Here is my post 2 weeks ago (sorry last weekend was a bit busy) that got a decent amount of interest from fellow crypto traders. For some context, I've been bullish on Bitcoin since the March equities crash in March of 2020 and have been involved since 2014. 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 2/1/21-2/6/21 is the inflection point from our January corrective period for both Bitcoin and Ethereum. It goes without saying but January was bloody for most asset classes except for GME. Look at the equities markets snapshot below for reference. Source. I feel like January was the "reset" period and the first week of February was the inflection point for the bull run to continue. I believe it will take a black swan or some earth shattering event for Bitcoin to dip below 29k and Ethereum below 1.1k.
The sell off in Jan 2021 was as big as March 2020
Bitcoin
First, I'll start off with big picture. Look at the supply of BTC held on exchange wallets - this is the available supply of BTC available for trading across all major exchanges. It's been on a sharp decline with the slope declining fastest in Summer 2020 and subtly flattening out but still declining nonetheless throughout Fall and Winter of 2020. I would like us to continue this trend, and perhaps have the slope intensify signaling a more rapid "HODLer" investor sentiment.
BTC Supply On Exchanges is about 2.34mm
There are other on chain indicators that I'd like to see kick up again in order for us to experience what happened in the Fall of 2020 for Bitcoin. In particular, institutional purchases based in the United States done through Coinbase Custody. As of now, outflows (withdrawals) from Coinbase Pro, are not at the levels we were at in Fall of 2020 when Bitcoin was rising rapidly week over week.
Institutional investors need to ramp up their purchases again, right now it's small
As for my options positions, I'm beginning to take small long positions. See below. I have a calendar spread for March, June and September expiration with strikes: 40k 48k, 52k and 56k. I'm also short puts for 2/12 expiry and have a YOLO long call open for 44k 2/12. I'm not full force yet until Bitcoin clears previous ATH. One more bullish indicator is that SOPR looks to be fully reset and on the way for the next leg up. If you're not sure what that is, I made 1 min video here.
Ethereum
The most bullish signal for Ethereum has been the reopening of Grayscale's ETHE trust. As most of you know, it was closed early in December. ETHE is literally what the SEC tells institutions to invest in if they want exposure to Ethereum... this is extremely important and I cannot stress that enough. Imagine how powerful of a directive that is, when the United States SEC is informing institutions to buy ETHE when they are trying to get exposure to Ethereum.. Since re-opening Grayscale added approximately 104k Ethereum to their ETHE trust.
Notice the flat line in holdings starting beginning of Dec 2020
This time for my options profits, actually took profits. Most of you know in my last post I had a 31k PnL for Ethereum which melted to 5k from my last post. Not this time! I actually took about 3.5k of profits so far and 29.9k unrealized in long call positions. My short put positions totaled about $362 in realized profits. Notice the expirations on these positions... I think I will be HODLing these long calls until I see something drastic. As of writing this post, I actually re-bought the June 1600 calls after this past weekend dip. I will be continuing my bullish perspective on Ethereum until we dip below 1300-1400 range.
In order for us to continue for Ethereum, I would like to see more institutional investment, that would really drive the price upwards. 1700 was clearly a profit taking level, I will also be looking to trim some positions at 1800, 1900, and 2000. My original thesis was that Ethereum could hit 1600 in Q1 2021, my revised thesis is that we can hit 2000 within Q1 2021.
Happy heisting.
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