I need to make a template for this kind of story because it keeps happening over and over again.
Bitcoin is taking a dump because of rumours of a crackdown in China. To be specific, supposedly the Shanghai offices of Binance, one of the largest cryptocurrency exchanges in the world were raided by the police on Thursday.
Leading of course to headlines such as this one:
The Script Always Stays the Same
For crypto-veterans, this script has been played out so often it’s getting tedious.
For me, my first big “China is going to ban bitcoin” shock was in September of 2017. I had been trading seriously in crypto for about six months.
Rumours of a China crack-down took the price of bitcoin down from near $5000 to under $3500 in less than a week.
And guess what happened?
Absolutely nothing, except that the price of bitcoin recovered and boomed to nearly $20K in December of that year.
Is it different THIS time?
I would be a little more nervous except that these rumours hit the market almost exactly one week before the monthly futures contracts are set to expire.
And that means somebody made a fortune selling short bitcoin November 29th call options.
Bitcoin has been declining steadily in the last week of every month since April. And the traders selling call options on bitcoin have been making a killig.
I’m not mad that somebody is doing it. I’m upset because I noticed the trend in September but haven’t taken advantage of it.
Assume that selling pressure on bitcoin will continue until Friday of next week, and then we will see what the end of the year brings.
And what about the latest Chinese crackdown? If you stay long enough in the crypto-game, you will start to roll your eyes every time this story comes up, just like me.
DJ
