Are you trying to short Bitcoin?

Thanks to secondary market trader CFJ for his contribution to this article.

One of the most impressive ideas in the Tao And Tao Cycle theory is that "2020 is a big commodity cycle and an opportunity to change the fate of investors."

Look at this sentence seven months after 2020 and you'll have mixed feelings. All kinds of commodities after a slump out of the V-shaped curve, U.S. stocks, gold and other indicators have hit record highs.

However, bitcoin investors' three-month pentup of emotion was finally released in these two days. The bitcoin started its journey from $9,500 to more than $11,000, setting a new high for the year and completing a small breakthrough.

There has already been a reference to "312" this year, after bitcoin's return to $10,000, which some view as an irrational rise, calling for bears.

Before shorting Bitcoin, think, why short it?

The basic logic of shorting is that you think the asset has run its course, that the uptrend is about to reverse, or that the asset is already at the top of its historical cycle.

Even if we refer to the data directly from the trading platform, the open interest of BitMEX bitcoin futures contract is close to $1 billion, which has returned to the level before the crash of 312, and the price of Bitcoin has also returned to more than $10,000, also the highest price before the crash of 312.

But if you look around the world, bitcoin is not what it was in March.

Three months of sideways trading

Think back to the last three months, when bitcoin holders seemed to have been running short. Gold hit a record high, silver has surged, and stocks like Tesla have hit new highs.

Top to bottom: May to date, gold, silver, Tesla

Secondary markets around the world, and even A-shares have surged to 3,400 points, while the cryptocurrency industry has barely budged. From the perspective of the industry, the field of DeFi is indeed bustling, but this is not the traffic entrance outside the circle. Bitcoin is always the only hot search on Weibo, not even Ethereum. No matter how innovative DeFi is now, as long as the use threshold and capital threshold remain high, it will not attract a lot of traffic.

To put it bluntly, bitcoin has been abandoned for nearly three months. In early July, AKG storehouse childe once in weibo answer about "why other active secondary market, but only some fake COINS ring up", he compared the several good stocks, shares and currency and mainstream shanzhai, found in liquidity, market sentiment, many aspects, such as asset attributes, the currency cannot compared with other secondary market.

Is bitcoin too valuable? At $9,000, Bitcoin has a market value of about $180 billion, which may not be high compared to some individual stocks. In mid-June, Tesla's share price topped $1,000, a record high and a market value of more than $190 billion. But that's not the end of the road. Hot money and retail Fomo have doubled tesla's share price again. That money is in Bitcoin, which is probably at a record high.

That's just a single stock, and there are plenty of cars that weigh more than Bitcoin, but that still doesn't stop the money from flowing in.

For a long time, hot money's eyes are not on the coin ring. Bitcoin has actually fluctuated a bit during this time, but it's always short of breath. But the only thing saving the coin circle is the rise of Bitcoin, only the inflow of money, there is no other way.

The hysteresis of Bitcoin

Admittedly, bitcoin's rise has a serious lag. In this tech-heavy bull market, all the tech leaders have already gone up a round.

In nearly three months, the chip leading TSMC from nt $300 to nt $430, more than new energy leading tesla from $700 up to $1900, the highest space travel leading virgin galactic from $15 to $27, leading Beyond artificial Meat Meat from $90 up to top $160, the leading shares led the technology sector is the history of rare leader of the secondary market bull market in the world.

In the blockchain industry, which also belongs to the technology sector, the leading target is undeniably Bitcoin, but it doesn't move.

Even if the "digital gold" story is still used for Bitcoin, the spot gold has been at a record high for a week before bitcoin started moving, and the lag is still there.

The good news is that bitcoin is finally giving us hope.

Do you want to short bitcoin

When bitcoin returns to $10,000, does that mean it's time to short it?

There is an old saying in the secondary market, "The best money in the market is emotional money, followed by technical analysis, and then fundamentals." Back in global markets, everything is different from March. The unprecedented release of water by the global central bank has formed a new round of wealth distribution. A large amount of money has chosen the technology sector and gold as the haven assets. All the technological leaders are either on the way to new highs or new highs.

In other words, we may be living through a tech bubble.

Hot money chose the tech sector as its place of investment, creating a bull market in the tech sector, just as they chose the Internet sector 20 years ago and created the Internet bubble.

Is the tech sector expensive now? So high, even Elon Musk, the founder of Tesla, has tweeted that tesla's stock price is too high, rising to $1,900 even after he issued a warning. The founders knew it wasn't normal, but they couldn't stop it.

Would you want to bet against Tesla when it hit a then-record high of $1,000? Maybe you thought about it, but looking back, all the investor sentiment was up, and you were bucking the trend.

Now the mood that bitcoin has been brewing for three months is being lifted.

All the fundamentals of Bitcoin remain unchanged: lots of demand for trading and speculation, a small amount of demand for value storage, and a small amount of demand for use. The probability of a large demographic dividend has not changed, nor has the Flow rate of Stock to Flow.

The only thing that has changed is that the water is finally flowing into the bitcoin field, giving people confidence that the harvest will be successful.

This point is not to buy bitcoin, because bitcoin is not yet certain to rise, but I hope you do not blindly short, because the short is likely to be against the underlying trend.

In 2018, James Cordier, a 55-year-old godfather of options, sold naked call options, betting that natural gas, which was still rising, had reached its peak. If we look at natural gas now, James is right. Prices are lower than they were in 2018, but unfortunately he is bearish on the uptrend. In November 2018, natural gas hit a 13-year high of $122, while James sold out of $150 million.

The tech bubble is in place, and there's a good chance that Bitcoin is already in the bubble. At this point, it's never too late to do nothing and wait for the emotion to take shape.

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