GBTC was up 7% the day prior to the run, with virtually no change in bitcoin.
GBTC was up t0 1357 from 1074, another 26%...
Basically 33% compared to Bitcoin's 17%
I thought this was absurd. HOWEVER, GBTC's NAV was "only" 50% higher than its bitcoin holdings. Y charts shows the average premium, to put it in perspective, to be 45%, dropping to as low as 0%...so yes, I'm sitting on a powder keg in a way. But bear in mind that the NAV premium high was 141%, and it regularly reaches 100%...so I was like...well...it could keep going up! So I'll wait. Wasn't even attuned to the possibility of massive, irrational intra-day movement.
The following chart shows the action. It was very easy to see where the top was, and I easily called the bottom in real time (hadn't been observing the chart when it topped).
The ideal case would have been to sell my 7 GBTC near the high, (short the instrument if possible), and then buy back double at the end of the move. It was obviously short-term overbought, then obviously short term oversold, and thus would likely rise back to a fair value.
And sure enough, it's on the way back up. And let me stress, this was an easy trade.
One of the reasons I didn't trade, is I wasn't paying that much attention, I didn't think the movement could be this exaggerated, and frankly I had in my mind that this was a longer-term trade, and there's no reason--judging by the BTC price--to get out at this time. I also tried trading a little move with little fundamental support (unlike the powerful information I have here) and I failed miserably.
But of course, I'm honestly disappointed I didn't turn a ~20% gain into a 40%-60% gain by adding some trading (which was super easy in this inefficient market) and maybe even adding some more shares on margin at the lows...I'm already taking a tremendous amount of risk overall with this position, so why not take a small amount of risk, comparatively, on a super high probability short term trade? I don't know, but I've missed stuff like this over and over again. This is probably the most glaring example, esp. because the bitcoin price moved so far over 2 days where it was not possible to trade.
You know, a similar strategy works for XIV...there are those days where it totally tanks due to algos position dumping. Different market, and more difficult to trade because of the speed of the algos, but plenty of profit potential.
One last thing, is this shows the power of trading around a longer term investment position. The main thing, of course, is one is (or at least should be) attuned to the movement of their position, so then one is automatically ready to spot these short term opportunities.
But of course, at least I can be ready for next time. And now you know!
No comments:
Post a Comment