Trading: bull bitcoin?

Since more than one month, with the exception of 23-26 April period, the price of BTCEUR pair on TRT is higher than spot price on other exchanges.

This price deviation started during the first sell-off of 12 March and exploded in the “panic sell” night between 12 and 13 of March: while Bitstamp and Kraken blew up to 3300 and 3500 EUR respectively, the price on TRT never went under 4300 price tag.

These extreme values are easily associated to liquidation of margin positions (as it was possibile on TRT more than 2 years ago, when an “unlucky” Consob intrusion has forced TRT to disable this important feature to support liquidity in any exchange and this alone should deserve entire articles), but I want to point out spread was about 10% between TRT and other exchanges for almost an entire day, and went down progressively but slowly in the next days. Not to mention the opposite side of the spread, where BTCUSD pair of Bitmex Perpetual Swap touched 3500 USD and its june future even 3200 USD. Just for the sake of it, triangulation between EUR/USD (at the time about 0.91), led to a price difference that at peaks reached 33% (seen from TRT) or even 50% (seen from Bitmex).

So, for some days we have taken advantage of these huge arbitrage opportunities and the same notorious “instant gain” that crypto far-west offered us around 2016/2017.

After the stampede ended, the spread between TRT and Bitstamp/Kraken has never been closed completely: price on TRT remained higher to the other exchanges, with an oscillating fork of 0.5% to 1%, unfortunately not that big to risk an arbitrage, with peaks of 1.5%/2% during the most significant rises of last month.

On a chat that I follow, one user that I listen closely has argued that the constant difference in prices has been set by italian retailers who buy BTC to defend themselves against current situation and economy instability. Even if I have great trust in this user, I disagree on his analysis: I think buy pressure on TRT is due to some italian whale who, being bullish, thinks risks in moving FIAT funds in and out foreign bank accounts is far higher than loosing up to 1% in BTC/EUR pair.

One last personal thought on market direction and relative position. 

Technical analysis on short term is something only useful to cook chickens, but I think it is relevant, especially on cryptocurrencies market, in the long term.

Since the Dicember 2018 crash, I was firmly and strongly bear during all 2019, losing the gain opportunities offered by the Spring 2019 dead cat bounce.

This personal opinion, purely instinctive, was based on SMA 200 Weekly analisys, which is the moving average never broken since BTC is born and which has served as support during sell-off of January and August 2015 and, lately, between December 2018 and February 2019. 

A support line that is repeatedly tested sooner or later gets defeated, so my opinion, again purely instinctive, was that SMA 200 Weekly had to be broken in order for BTC to find support on a deeper moving average, to be retested again as resistance in accumulation period not less than 6 months.

March 2020 capitulation, as we must talk about capitulation when an asset loses 2/3 of its value in one month (13 february 2020 / 13 march 2020) with volumes never seen since the beginning (2145000 BTC / 11747 USD milions traded on Bitmex on one single day 13 March), has changed my perspective.

If there’s a way to change outlook from bearish to bullish without waiting one year of tears and blood with low volumes, this had to come from a deep and sudden break of the well known moving average; event that has further accelerated the capitulation and led quotations to such hypersold situation whose rebound, of the same aggressive character, has brought prices to consolidate above the average. So, yes, we have broken SMA 200 Weekly, but not for long enough to let the solid part of the Weekly Chart candle below of itself and give the weekly chart of Dicember 2018/March 2020 a similar look of the bottom January/August 2015; notwithstanding that I break out in hives when someone talks to me about fractals to explain a future market movement.

The last happenings of the economic and financial cycle, being reinforced by COVID-19 uncertainity, can be interpreted as strengthening of the bullish thesis.

This contibution has been made by PNK. PNK is a trader specialized in cryptocurrencies. He is also a therocktrading partner. The opinion expressed in this article are solely his own and do not express the views of opinions of therocktrading and are not intended as an investment proposal of any kind.