Digital Currency Revolution Series: BTC/USD bulls gain in volatile swings but snap failure swings to trade and short hedge remains intact

Majority of the crypto-baskets are now sensing overbought pressures as the mild upswing now appears to be exhausted to gain the momentum.

Bitcoin price trend is showing some failure swings at the stiff resistance of $8,520 level and resumed bearish sentiment to drop -1.64% from thereon.

BTCUSD has formed gravestone doji at $8,430 level to plummet prices below 7-DMAs (i.e.8399). Currently, the pair is trading at $8,380 level, attempting to slide further as both the leading oscillators screaming with the overbought pressures.

Contemplating above technical rationale, we now wish to reshuffle by initiating shorts in CME BTCV9 contracts as more price slumps are foreseen in the near-terms.

At spot reference: $8,380 (while articulating), Target – $8,280 levels, stop loss - $8,459 levels, thereby, one can achieve attractive risk reward ratio with this trading strategy.

Please be noted that the writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.

The losses in the crypto-avenues, in the recent past, were triggered by a vigorous price drops in the last week that evidenced the price of BTC tumble from $10,048 to the recent lows of $7,714 level. Although, there was no concrete reason for the price slumps except for stringent, sceptic and delayed regulatory outlook, nevertheless, some analysts perceive the lacklustre Bakkt’s launch of Bitcoin futures contracts as the sell indictaion that triggered recent losses followed by a wider sell-off across the week. 

Hence, alternatively, on hedging grounds, we already advocated short positions in September month’s CME BTC contracts. We now like to uphold the same strategy by rolling over the contracts for October’19 delivery as we could foresee more downside risks amid global financial crisis.

Usually, as the contract period approaches expiry, the futures price likely to converge to the spot price of the underlying asset.