The 10th day CBOE futures listing

10On the Tokyo-based exchangeCBOE, Bitcoin futures are expected to be listed, and the market is in a festive mood.11/29saw a speculative sell-off once, but when protected around the line slightly below 1,000,000 yen, the market then rose overwhelmingly.100man-yen was slightly breached, and afterward the market moved upward in a one-sided fashion.

There were moments when selling intensified at technically significant points on the chart, but all of these failed, and a market with no participants wanting to sell emerged.

■ Materials are largely ignored

CurrentlyBTC/JPYis trading in the16,000,000 yen range. In half a month, it has roughly doubled in value.

The market, not paying heed to technicals or fundamentals, has led us to drop the inclusion of technical indicators.

12/6, there was an increase of1 day by about23万円, the largest daily gain on record.

From the belief that domestic exchanges are driving prices, we believe the buyers are individual investors who use leverage trading.

The spread between futures price on major exchanges and the spot price is about10万円, and even if it’s high, investors who want to buy with leverage show urgency from here.

■ Market sentiment is overheated

Following a sharp drop in the late night of 11/29, many investors who had been long were estimated to have suffered losses. Yet within less than a week, new all-time highs were reached again, and many investors rushed to buy to recover losses. In such markets, purchases go in regardless of valuation. This tends to tilt positions toward buying, making short-selling efforts prone to fail. Therefore, most participants feel pressured and cannot confidently sell, skewing toward further buying, resulting in an overheated state driven by panic.

This pushes leverage per trader higher than before, meaning even small declines trigger stop-losses. This triggers cascades of other investors’ stop losses, so although prices rise, the market becomes highly sensitive to a trend reversal.

■ By year-end200yen, or a crash?

What could trigger a crash and its timing

①   Next week, when BTC futures are listed, a materializing sell-off by the fake-breakers (cellar-fact-type) may occur (probability: low)

②   Institutional investors heavily selling using futures within the year (probability: medium)

③   In consideration of Japanese individual investors who are currently leading the market, a price drop attack may occur when the mood loosens (probability: medium)

these three scenarios are assumed.

Especially for ③, although it is a classic market-seasonality tactic, it involves Japanese investors returning home for the New Year and intentionally dragging down prices when they are away from the market.

Some may wonder why go to such lengths, but seasoned professionals are ruthless and target the weakest players with the most positions, so in BTC trading as well, investors who use margin to leverage are prime targets.

Conversely, if ① and ② fail and the year ends in an uptrend, we could see 200,000 yen or more.

■ Will institutional investors buy or sell?

I also think it is unlikely that institutions will buy from futures buying.

Cryptocurrencies are still a technology with future potential.

Institutions will likely maintain a buy stance in the medium to long term. However, the more bullish their stance, the more they want to buy cheap, so they need to threaten the currently optimistic investors with fear. Therefore, the short-term stance would be to push prices down as much as possible and then buy back.

Honestly, in this market you never know when the drop will start. But when price movement accelerates, stop-loss orders become a key signal. When the decline begins, we should aim to follow the down move while monitoring the 50% line from the high before the drop to the low, and stay with the selling.

Generally, I want to follow an uptrend, but when reversals occur, act decisively by exiting stop losses earlier than others and reversing, making decisions boldly and calmly. Do not try to recover losses.

-------------------------------------------------------------------------------------------

【Author】

Kawada Saiou(Kawada Saiou)

Trading Securities Market Division, Dealing Section

Born in Geneva, Switzerland. Graduated from Keio University.

His experiences traveling the world provide grounded, experience-based fundamental analysis with persuasive fan mental models.

Using behavioral economics learned in college, he analyzes psychological biases of market participants theoretically and applies them to trading.

Hobby is shogi; as an amateur high-dan player, mid-game maneuvers also inform reading the next move in the market.

“The crowd is always wrong” is his creed.

【Disclaimer】

The Bitcoin market information and other content provided on this site reflects the author's personal views and do not guarantee the accuracy or safety of the content by the author, Traders Securities Co., Ltd., or our company. Also, such information is provided for reference only and does not endorse any specific investment actions or strategies regarding virtual currencies. Customers should make investment decisions on their own judgment. Any gains or losses from investments belong to the investors. The author, Traders Securities Co., Ltd., and our company are not responsible for any damages arising from using this information.

-------------------------------------------------------------------------------------------