Much was anticipated in terms of the reaction of BTC and the broader crypto space were the USA to launched a military offensive on Iran. The broad consensus based on the last few years trading patterns was that crypto markets would be hit hard alongside equity markets were news to break of a strike on Iran. The reality is that Bitcoin showed in the last inflationary cycle that it is not a hedge against inflation and is trading more like a risk asset, equities as such. However, all this has now been upended. We saw an initial drop on the news that strikes had begun on Iranian military facilities but quite quickly a recovery rally. It’s also important to say the drop both in Bitcoin and Dogecoin was not severe at all, much less than anticipated.
Where do we go from here? That depends on one’s current positioning. In terms of the long term picture we are at pretty low levels. If I was totally flat at present and looking to deploy capital to Dogecoin I would want to have something on. If we do see more of a flight to quality move with digital assets then in time we would expect to see more of a rally. However, personally I am not discounting a sudden collapse if things were to really escalate. At the moment we have seen the Straits of Hormuz effectively closed, Brent crude rally significantly but still crypto has rallied. It’s hard to see how much further things can escalate. Personally I am long down here but not in significant size, I certainly would like to have more on but was hoping to see Dogecoin trade sub 7 cents after the initial strikes. I will hold what I have looking to start scaling some out around 16 cents but will have some size still on for the longer term. One thing to be sure, don’t be rash down here as the geopolitical situation could lead to an explosive move and trading for the sake of trading puts you in the worst position when you get caught the wrong side of a big move.
Flash Crash
In October last year Dogecoin experienced a flash crash when a raft of orders triggered stops and liquidity was not enough to stop a near 50% fall in seconds. This is why it is useful to queue orders in the market in case of a flash crash. That doesn’t mean sticking orders close to the market. It means for example looking at strong support a long way off where the market is trading and then queueing just above the support in my case. For example, when the market was trading 20 cents at the time, I had 10.2 cents queued and was filled, subsequent in the melee that occurred market orders were not going through even at 13 cents yet within half an hour 20 cents traded. That can be a very good profit, it happens rarely but be ready for it!
Sitting On Our Hands
“If in doubt, stay out”
Always been the motto I have stuck to, yes it takes guts to go long in to a collapsing market when fear is everywhere but the conviction should still be there. If you don’t have strong conviction don’t trade for the sake of it, sit on your hands, other opportunities will come.
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