Long/Short Equity, Dynamic Trend Following, Option Tradnig
Contributor Since 2008
The stock market is making new highs on just about a daily basis. So is bitcoin and its ETF derivative, GBTC. As has been written here time and time again, this stock market bubble will eventually burst and there will be outstanding profit opportunities on the way down. But what about bitcoin?
Stocks and cryptocurrencies seem totally unrelated. My use of the verb "seem" is because the concept of bitcoin (and digital currencies in general) is so new that it is folly to try and categorize it in the realm of more traditional securities. In fact, GBTC notwithstanding, bitcoin is not a security at all.
What happens to both in the event of a stock market decline? Since they went up together, maybe they go down together. But they are so different in substance there no evidence to support any correlation in price movement. It is just as likely, or even more likely that as stocks fall bitcoin soars. One thing we do know for certain is that no matter what direction for either stocks or bitcoin, our trend lines will follow. That means we will make money, maybe big, big money, on both sides of that equation.
Who does that make the winner?
Going forward into 2018, between the stock market and cryptocurrencies we are looking at the greatest trading opportunity I have seen in my lifetime.
Disclosure: I am/we are long GBTC.