Hi traders, I've sold more BTC on the bounce and I am now mostly hedged in cash.

Here's why...

Where we are now.

• The market is very extended and the price has gone parabolic which prompted me to sell 50% of my bags for a 1300% profit;

• As far as fundamentals are concerned, NASDAQ is rumored to plan on launching its own Bitcoin futures in Q2 next year while CME is set to launch its futures on December 18th;

"The futures will be cash-settled, meaning that no actual bitcoins change hands at the expiration of the contracts."

• It looks like Bitcoin is having its Wall Street moment as Ari Paul from Blocktower puts it. According to Ari, Bitcoin's adoption will evolve as follow:
  Cypherpunks -> Engineers -> Silicon Valley -> Wall Street -> Institutional Investors -> Main Street

If this turns out to be correct, we could still be years away from true mainstream adoption which means that the price of Bitcoin might still be vastly undervalued (that is the reason why I am keeping half of my bags). However, the road to mainstream adoption will not be without obstacles.

• As a consequence of all this media attention, the Bitcoin bashing has been getting louder with people like Joseph Stiglitz calling for it to be outlawed or Jack Bogle advising investors to avoid Bitcoin like the plague, clearly the rise in price of BTC is a double-edged sword and I wouldn't be surprised to see some state-regulators take more extreme measures against Bitcoin in the near future, with consequences in terms of price.

Where we could go.

• Bitcoin's had a weak pullback, found a floor at $9001 (which roughly corresponds to the red fib level on the previous image) before bouncing back to the 61.8% fib where I sold my bags. By the way this shows you how powerful a tool fib levels are when trading a very liquid market like Bitcoin. Now, given current market sentiment, I wouldn't be surprised if the price keeps consolidating between the 23% and 61% fib levels for a few days before going back to retest all-time high ($11441 on BITFINEX) and possibly break out, in which case I'd be looking at trading around the $15,000 level.

HOWEVER.

• Keep in mind that there is a major event coming up on December 11th when CME futures will go live which could lead to a "sell-on-the-news" drop in the price. Fundamentally, we also yet have to see how the price of Bitcoin will exist alongside futures trading and if these will have the effect of reducing or amplifying its volatility.

• On the bear-side, if we start breaking under $9000 in the next few days, I wouldn't be surprised to see a huge washout followed by a correction down to around the primary trend-line, if this happens we could see something truly spectacular happen, my guess would be the $6000 to $6500 area.

• If such a correction happen, the smart play is not to sell on a red candle but rather to wait for the price to bounce then sell on a green candle around a 61.8% retracement, use your fib levels!

At the end of the day, we are in uncharted territories here and we as traders and investors need to proceed with caution going forward. At some point the market will correct and when it does, you'll be happy to have locked in some profit in the bank.

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Cheers.