The Grayscale Bitcoin Trust ($GBTC) trade has been a monster trade. But it’s tired now and I’m moving to the sidelines. (January 08, 2021)
GBTC
I want to look at the Bitcoin Trust here, GBTC ( OTCMKTS: GBTC ), and this is why: I have been talking about this maybe even more than I should but I get messages from people, they see posts in our forum. Like what do I do? What do I do with this because this thing has just been absolutely screaming? It has been a bear killer like you can’t believe.
One point, it’s up almost 40 percent just this year and now we are seeing a pullback. It’s not a big deal, 1.2 percent pullback today. This is what the weekly chart looks like. This is kind of my longer-term price target, I don’t expect it to go there in a straight line but it’s just on Fibonacci extensions. But if you look at it on a daily basis this is really, really tired. And so what I would suggest you do, if you are long this is to take some profits, depending on the style of trader you are, what your preference is or ability is with respect to holding stocks that may be in a bit of a pullback. Maybe you are okay with that, maybe you are not but you have got to take some profits on this.
When a stock does this, where yesterday, it closed up yesterday, however, the price action was, in the morning it gapped up, it basically traded sideways all day long and then closed lower; still okay within the trading range of the day but it closed lower, obviously, off of the high, which is different. Because like this was right at the high, this was right at the high, this, right at the high, this close enough to almost be right at the high.
So the bottom line is, this stock has been doing really, really well. And then yesterday you get this kind of sea change, where the stock gaps up and then trades lower. And then today the stock gapped up again because Bitcoin ( OTCMKTS: GBTC ), at one point earlier in the morning when I was waking up fretting about my insomnia I noticed Bitcoin ( OTCMKTS: GBTC ) was up at like 41 grand. And so you know that this is going to open higher just because people are rushing to get in even though it doesn’t trade in perfect sync with bitcoin.
However, they bought, and now this has closed right at the low of the day. We will look at this intraday stuff. This is where the thing opened up, it rallied up a little bit more and then started selling off. Think about it, with respect to what it did from one day to the next it only closed down 1.2 percent. But if you bought at the open today thinking you are getting in on something because Bitcoin ( OTCMKTS: GBTC ) was up above 41 grand, you’re not down 1.2 percent you are down almost 9 percent.
The bottom line is, as I look at this now I think the next move is going to be lower on this. Now, do I think it’s going to be a lot lower? To be honest with you, I have no idea, I am just managing risk here. And the way I am looking at risk is, this has had a heck of a run, you just keep drawing back, how long? From here it’s up 19 thousand percent, this thing is up huge.
At some point you have to ring the cash register at least on half or even most of it because every day you should look at a stock and say, Okay, if I wasn’t in this trade right now would I wish I was? Not would I buy it today because most of the trades that I am in, there is only one time that I would be buying it and that is when I do buy it. The rest of the time, yes, I am glad I am holding it.
If I wasn’t in GBTC ( OTCMKTS: GBTC ) would I be in it now? Answer, no; I would say no, I see this thing reversing I have got to just wait for that. Maybe we will get a 10 percent pullback, maybe a little more but I just can’t own it here, I wouldn’t want to own it. Therefore, if you’ve got a big huge hairy chunk of profits in this then go ahead and ring the cash register and get your year off to the right start.
Free Chart