November 12th 2017
Since Friday 10th November there have been huge swings in the price of Bitcoin and Bitcoin Cash. These changes initially started due to rumours that a large amount of network hash power would switch from Bitcoin to Bitcoin Cash after the Segwit2x changes were postponed. As investors are aware we are still holding Bitcoin from the accumulation period leading up to the fork. These Bitcoin could not be sold during the Segwit2x announcement, as previously mentioned, and as such are being treated as standard trading rules.
During the market moves of the last three days there have been no AI-backed trades that the fund has taken and the fund still holds BTC.
We have seen several opportunities within BCH, however as the fund does not trade BCH we have been unable to capitalise on any buy or sell opportunities in this asset. On Bitcoin we have seen no signals that meet the risk criteria applied to the fund. We have seen long opportunities on the H4, however have not wanted to in increases our BTC holding further. We have seen short signals but these have contained AI-backed warnings suggesting the moves have not been backed in a sustained way. The trading rules applied to SIFT lead to not trading against our AI advisor which, currently, recommends remaining in the BTC holding.
In addition to our automated systems, our market analysis also gives no clear indication on which direction the market is going to move over the long-term. We believe there is at least a 50% chance that the price of Bitcoin will rebound rapidly by mid-week with a price in the $8,000 to $9,000 region. This will all come down to the news that comes over the following days.
SIFT continues to monitor the situation and is prepared to close the trade at a loss if the market makes a sustained directional change. For now, however, the trade remains open.
There are several trading strategies that SIFT would have liked to have employed over the past few days. These would have seen diversification in to other coins to take advantage of temporary fund flow from all assets to BCH. This would have seen us take positions in ETH, ETC and ZEC but all of which would offset Bitcoin losses over and allowed the risk position of Bitcoin to be closed even with a loss at a neutral cost to the fund. None of the trades, however, would have complied with the SIFT trading proposal that we offered – never trading against our AI-based systems. We are looking at ways we can suggest relaxing trading rules to better allow us to take advantage of certain market moves. Any such changes would be subject to a vote as they would almost certainly increase risk to SIFT-holders.
We will report on this trade when it closes but will also make further announcement if there are any other major changes to trading conditions in the coming days.
We believe that the market will clarify over the course of a very turbulent week. We envisage various movements in the next few days as hash-power, and therefore difficulty levels and profitability, of both BCH and BTC fluctuate. The movement of funds suggest that a lot of market manipulation is currently underway and therefore trading in either direction is extremely risky without the benefit of hindsight.