Since the 3rd halving of Bitcoin only has 2 days left, different expectations of that it will do significant effects on the Bitcoin market have shown up. While we daydream that the Bitcoin price will pump like Apollos, we should be aware of the possible accidents after the halving completed.
Checking the Bitcoin market history, and the cryptocurrency market, as a part of the conservatives, 3 signals have been detected and would be posted as follows:
The First Signal: 8 continuous positive lines showed up in the weekly chart which also happened 3 years ago.
The Bitcoin market experienced a surge on May 8th, and even once broke the $10,000 mark. Definitely, it has been posted on different sites and news. Under the background that the 3rd halving of Bitcoin is near at hand, almost all the investors and traders became much more bullish than before, the motivation to long Bitcoins was never strong like now.
After switching to the weekly chart of BTC/USDT, 8 continuous positive lines broke into our eyes. The last same situation happened in April 2017, which means that the boost after the “Plunge” on March 12th tied the record 3 years ago.
In April 2017, after 8 continuous positive lines, the market had been through a 5-weeks adjustment. After then, as the world knows, the 2017 amazing bull came out.
The signal of “8 continuous positive lines” is extremely rare, even at the end of the 2017 bull market, the miracle did not happen again. Although the continuous positive lines showed up and brought a bullish signal up, such a dramatic rise in the short-term should be paid attention to in case the market needs an adjustment. Besides, while the market is expected to be bullish due to the BULL brought by the upcoming halving, the market is no lack of the investors who are going to, or already have chosen to cash out.
The second signal: The market surged but only the Bitcoin market surged now.
In the daily chart, after the plunge on March 12th, as a whole, the Bitcoin market remained a shocking uptrend. What should be noticed is that at first, the market ran within the parallel channel, but when the last day of April came, the Bitcoin market burned, and the growth rates suddenly increased, which caused the candlesticks to break the channel. Until now, the Bitcoin market once touched the $10,000 mark, which is also a position that is full of pressure, and a satisfying price to a lot of investors at the moment.
As the halving is about to happen, it is obvious that the market is bullish, but we should be aware that only the Bitcoin market is bullish now. If you have checked the weekly charts of other major tokens, you would find out that for recent days, they all presented boxes on their daily charts even the Bitcoin market was BULL. Moreover, even the market seems more and more bullish, we still can detect risks exist from the chart and fundamentals. Possibly, the market needs times and spaces to absorb the extreme increase that happened these days.
The third signal: What if the Bitcoin price has reached a recent peak?
Here is a graph of the Bitcoin market in the last halving year in 2016:
We know history never repeats. However, when we checked the recent halving of the other tokens such as ETC, BCH, BSV, the same results happened.
On this page, we have to keep us posted that the halving may bring a bull dream to us, but before that, a callback seems to be destined since the BULL news has been “cash-out” at the same time.
Then, how can we save our assets from value losing?
（A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, gambles, many types of over-the-counter and derivative products, and futures contracts.）
In fact, investors in most financial markets have the common point that they acquiesce the market will present an uptrend. And this thought is dangerous because fluctuations are a normal factor in every market, including the bitcoin market after the 3rd halving. No one has the ability to promise that the bitcoin price will gain after the 3rd halving. So, in this context, HEDGE is the most necessary thing. For the investors in the spot trading market of bitcoins, financial derivatives (futures and options trading) is the easiest solution for hedging.
Due to the futures trading is too risky, most normal investors are not able to control the risk so that bitcoin options is more suitable to hedge the risk when you hold bitcoins. For example, BTC Options on BitOffer, a bitcoin mercantile exchange, requests 0 fees, 0 margins, and users do not need to exercise the contracts. It is obviously the best hedging tool ever!
Then, how do we hedge the risk by options trading?
For example, now the Bitcoin price is $10,000, and you hold 1 Bitcoin. You would earn $2,000 if the price rises to $12,000.
But what if the Bitcoin price drops to $8,000?
l Without hedging, you would directly lose $2,000.
l But if you buy a put options contract with a low budget to hedge the risk of holding 1 bitcoin, you would directly earn $2,000 with the put options contracts you buy on Bitcoin Options. In this way, you will save $2,000 loss in holding 1 bitcoin.
If the bull market comes, and I just wrote a ridiculous article, the largest loss of buying a bitcoin put options contracts would always be less than $50.
Time to invest with your brain, not bet with your bravery.