Market Lemmings and the Bitcoin Hard Fork

Hold On For Dear Life - No Thank You

Aug 1st the Bitcoin Blockchain will hardfork creating a new crypto currency Blockchain, something called BCC - Bitcoin Cash.

Holders of Bitcoin in private wallets and on certain exchanges will see their bitcoin birth a second coin into a new wallet. Not many of the exchanges are participating and only a few will allow immediate trading. Bitcoin Cash will be valued at approximately $400 the moment this occurs.

It's a bit too late now to position for the 'free' coins as this has created a sort of mania that has seen the bitcoin network bottleneck and for security purposes transfers from exchanges have required extra confirmations. Every 'investor' and their mother have been putting their coins into cold storage or onto the exchanges participating as they chase the dream.

In fact, its too late now to do anything as many of the exchanges have temporarily closed deposit and withdrawal of bitcoin for the event.

I don't understand all of the technical jargon of this decision and then making it happen - and to be honest I don't particularly care - I trade charts and sentiment.

Have you ever seen a lemming?

They are these little fur-ball rodents that behave like a herd, blindly following each other - sometimes off a cliff - other times they just bury their heads in the sand... Sort of sounds familiar right - believe it or not, this is legitimate terminology to describe certain crowd mentality when it comes to investing and trading.

Investopedia Definition of a Lemming

The act of an investor following the crowd into an investment, without doing research themselves; this usually results in losses. These investors are emotional and easily swayed by the current on goings of how well or bad the market is doing. This term is considered a "herd" mentality that can increase the chance of losing invested funds... To contradict the "herd" mentality, many proactive investors react in an opposite fashion than what the majority of investors are doing.

In the animal kingdom, a lemming is a rodent known for periodic mass migrations that occasionally end in drowning.

Someone is going to get Forked

I have no interest in chasing the event. When someone tells me, free money from nothing, I think of a magician pulling a coin out from behind me ear. When I see mania, individuals with little to no real world trading or investment acumen falling for the magicians trick -- I become contrarian.

The majority of bitcoin users locked themselves in for a binary event - yes or no - up or down. I don't like those odds.

I am bearish this event, what I think will be a hyper volatile day, a sell the news event. I won't be betting against and I am still in bitcoin and some cash. I will be using margin to take advantage of the alternate large cap crypto currencies and their current pricing. I don't speculate - I trade what is in front of me - price action is key and cash is king.

A Go Either Way Trade

For some of the more affluent and perhaps knowledgeable traders and investors I have done the following technical analysis on bitcoin.

I am observing a broader pennant formation with the appex somewhere towards the end of the year. Pennants are triangular and do not denote direction, just a trading range and an estimation of when this will be breached in a bullish or bearish manner.

In the immediate term going into the event Bitcoin is forming a bull flag into rectangular consolidation after V bottom. If bitcoin fails to continue to break higher we are looking at an M top - this would be the least desirable result for investors. M tops result in swift, volatile and steep declines.

What I believe is more likely, we see a failure/false breakout of the bull flag and a back test of that lower, red, trend-line, somewhere around $2200.

I am not an expert and nor is this trading or investment advice, I just simply felt it necessary to address the very obvious herd mentality and what it usually results in.

We don't believe in Hold On For Dear Life - We never chase - We only buy pullbacks - We use strategy - Risk Management and Capital Preservation are primary.

I wish everyone luck and I look forward to your comments!

<3 @satchmo