I guess a seasoned trader of traditional securities would cringe at bitcoin’s continued volatility, but I’m still really intrigued by the seesaw drama.
Only weeks into this project, I still don’t really have a good understanding of the entire landscape, and all of the factors that always seem to accompany a surge in bitcoin price. I’m still getting a sense of the trends and signals that precede the bumps and dips.
This morning I woke to news of the sudden drop in bitcoin price (it was trading at around $1070 when I went to bed, and now it’s at about $950). The drop was caused by two China’s major bitcoin exchanges have frozen bitcoin and litecoin user accounts for a month to implement better anti-money laundering security protocols.
Among other things, bitcoin price reflects the news cycle
I’ve started reading up on more advanced trading strategies and methods of predictive analysis and modeling, and I’m looking forward to figuring some of that out and implementing them. But in the meantime, I’ve also come to realize that much of the fluctuation of bitcoin’s price is related to the news cycle.
Once plugged in, following cryptocurrency-related news is relatively straightforward. Any big news related to new regulations, crazy hacks, new applications, adoptions or prohibitions of bitcoin and cryptocurrencies will likely affect price.
What I’m still trying to figure out is when to move on that news.
In light of bitcoin’s price drop in the past 12 hours, it looks like had I been paying a bit more attention to the news coming out earlier in the week about Chinese financial authorities meeting with Chinese exchanges to discuss stricter anti-money laundering laws could have foreshadowed bitcoin’s price movement.
In hindsight, there were indications that a drop might be coming.
Although, on the other hand, reading the news and predicting the future are two different things, and I doubt make trades following every meeting of regulators is going to be productive. So, I’ll have to figure out a good strategy to separate the signal from the noise and know when to make moves confidently.
If you have any tips or good strategies along these lines, please let me know.