If you don’t have a crypto account, you’re not on the sidelines. Here’s my take on the iShares Bitcoin ETF $IBIT – February 28, 2024
This is Dan Fitzpatrick at StockMarketMentor.com. Just a quick video today on IBIT ( NASDAQ: IBIT ), as I call it, the iShares Bitcoin Trust, BlackRock ( NYSE: BLK ), the big dog. This is the one that gets most of the action on the Bitcoin front. I want to look at the Bitcoin Trust ( NASDAQ: IBIT ) here.
The one thing you should notice about it, other than the volatility is, that it is super gappy. It closes here and then the next morning opens up 2 percent more. Or here, it closes here, and the next morning it opens up 3 percent. This one is ridiculous, it opens up 4 or 5 percent, the same thing here. It makes it very difficult for you to manage risk if you’re just trading the Bitcoin Trust ( NASDAQ: IBIT ) if you’re just trading it.
I think the better way to do it is through position size. The better way to trade it, in my view, is just to be tracking Bitcoin, Bitcoin trades 24/7. That’s the underlying reason why the Bitcoin Trust ( NASDAQ: IBIT ) is going to be gappy. Because there’s a whole lot of time between 4 in the afternoon and 9:30 the next morning. That’s when Bitcoin Trust ( NASDAQ: IBIT ) continues to trade.
I think you can really take your cue, as far as trading IBIT ( NASDAQ: IBIT ), again, as I call it, I think you can take your cue, not so much from that chart, but from this chart. Wouldn’t it be nice to know what a stock is going to be doing at 5:00 in the evening or 6:00 in the evening, at 4:00 in the morning, whatever, at 3:00 in the morning?
What I am saying is, you can get a handle on these Bitcoin ETFs much better by just looking at the underlying chart here, than anything else. As I see it here this thing is up to 62, almost $64,000. And then at one point today it was at 64. So this is the kind of thing where even right now, after hours, by the way this thing is going I would feel perfectly comfortable buying some Bitcoin ( NASDAQ: IBIT ), the IBIT ETF, and I actually did.
Because of this gap, let’s say you’re not watching Bitcoin itself, then a good way to manage your risk is to look and say, all right if this stock falls below the prior day’s intraday low, which here is 33.80, then I’m going to go ahead and sell the stock because the party is over here.
Let’s say you bought it here, that would give you about a 5.5 percent risk on this trade. Now, the one thing that it won’t help you with is gaps. If Bitcoin gets crushed because Elizabeth Warren goes on the warpath, then maybe it’s not going to be such a great trade. I don’t think that’s going to happen. I would just trade this according to Bitcoin, and then keep a stop below the prior day’s intraday low.
Free Chart