Tone Vays, a well recognized Bitcoin trader, recently disclosed his first trade of the year: to short Bitcoin near its yearly low.
At $6,150, close to the yearly low of Bitcoin at $5,900, Vays filed a short contract on BitMEX. Vays said:
“As Promised, my first and perhaps my only Bitcoin trade this Year. Short 1 BTCUSD at 5x Leverage for March 2019 Expiry. Full account Liquidation at $7,650 (above last swing high) -> Take Profit at $5k, Lower Stop Loss at $5,750.”
Bitcoin Surges From $6,150 to $6,800
Vays filed a short contract on BitMEX when the price of Bitcoin was at $6,159 with a liquidation price of $7,649. Hence, although the trade of Vays recorded a 15 percent loss, it has not been liquidated and it has never gotten close to its liquidation price.
But, almost immediately after Vays filed his first trade of the year, which was questionable given that BTC demonstrated record low volatility since Aug. 9 and was stable in the range of $6,000 to $6,800 for over two months, BTCUSD on BitMEX increased from $6,159 to $6,800, by nearly 11 percent.
The majority of traders and technical analysts in the cryptocurrency sector reacted negatively to the only trade Vays filed in all of 2018.
HAHHAHAHAHAHA
Shout out to Tone Vays for finally making his first & last bitcoin trade this year.
Almost liquidated within 12 hours.
Welcome to real trading, very different from predicting and paper trading. https://t.co/KVjXPA2fPO— [ Romano ] (@RNR_0) October 15, 2018
tone vays only trade of the year was shorting the bottom on margin
you can’t make this shit up
— King BTC (@kingbtc) October 15, 2018
Never a dull day in crypto :
– Angelo returns and calls the bottom
– Stardust returns with new account @inversebrah
– Tone Vays’ only trade of the year was almost liquidated (shorted yearly lows)
– Tether FUDWake me up when you have found a better community than CT.
— The Crypto Monk ⛩ (@thecryptomonk) October 15, 2018
RIP @ToneVays. Can’t say it’s much of a surprise tho
— Beastlorion (@Beastlyorion) October 15, 2018
Rip Tone Vays short i guess … pic.twitter.com/svYxMnegU2
— The Crypto Monk ⛩ (@thecryptomonk) October 15, 2018
Tone ‘liquidation’ Vays
— Jeremy Ross (@jebus911) October 15, 2018
Traders criticized the trade of Vays because he demonstrated such a high level of confidence that BTC would drop below the $5,800 mark, claiming that the probability of BTC dropping below the $6,000 support level, which it has successfully kept throughout the past nine months, is 95 percent.
Poor @ToneVays, that 5% got ya. pic.twitter.com/3jUXMsLKjF
— Crypto Hedge (@TheCryptoHedge) October 15, 2018
The timing of the trade was controversial because Vays has had many opportunities to short Bitcoin at appropriate times throughout the year. If he had been confident that BTC would fall to the lower region of $5,000, Vays could have shorted Bitcoin when it rebounded from $6,000 to $8,000, and when BTC achieved $10,000 in the first quarter of 2018.
Yet, Vays decided to file a short contract in a two-month period from August to October in which BTC has demonstrated record high stability and strong support at $6,000.
Moreover, filing a short contract in a period of stability is a high-risk, low-return trade, which is the primary reason why most traders avoided shorting BTC throughout the past two months. Even if BTC falls from $6,159 to $5,800 or to mid-$5,000, unless extreme leverage in the range of 50x to 100x is taken, it is difficult to generate a high return.
Where Market Goes From Here
Since August, BTC and the rest of the crypto market have struggled to demonstrate a convincing recovery in daily trading volume to confirm a strong short-term rally.
In the past 24 hours, the daily trading volume of BTC has increased from $3 billion to $5.8 billion, by nearly two-fold. The volume of the entire crypto market, which declined below the $10 billion mark last week, surged above $17 billion, by more than 75 percent within 48 hours.
Bitcoin briefly broke out of a long-term descending triangle dating back to January of this year, and a breakout above the $6,800 resistance level could confirm a short-term rally that could provide investors in the crypto market a positive sentiment before the year’s end.
Currently, the actual price of Bitcoin on fiat-to-cryptocurrency exchanges like Coinbase, Bitstamp, and Kraken remains at around $6,450, slightly down from the $6,700 weekly high it achieved yesterday.
If the volume of BTC can be sustained at the $5 billion level and the market continues to initiate a minor increase in valuation in the days to come, a breakout of the $6,000 region is possible.
