 If I put 20% of my assets into Bitcoin and it fell down to 5,000, how am I going to fill? Traditional markets, they're trading in very small percentages. Bitcoin can trade in multiple percentage points per day on like a boring day. And then there will be a fast move that will come and a lot of people will say, oh my god, why was I not on that move? And they've already missed it. What's up, guys? Welcome to our weekly crypto market updates. Today with us two very cool traders, Eric Crown and Charlie Burton. Welcome, guys. Regarding the Bitcoin price, last Sunday we saw an abrupt drop in the Bitcoin price from above 9,000 to the mid-low 8,000. How did you explain this sudden drop in the Bitcoin price, guys? First, Eric. Yeah, so if I can share my screen really quick right here. Okay, very cool. Yeah, Bitcoin hit a pretty major area right here. The 200 simple on the daily always going to be a classic pullback area on your first pass. And also hitting a very long-term trend line as well. So actually, let me just throw it in right here. Maybe, yeah, there we go. All coinciding in that same lower 9,000-dollar region. So Bitcoin likely to pull back off a region like that. And now consolidated at a higher level, which I do think as long as we hold, especially 8,300, more or less okay. You know, the resiliency within this region is actually very reminiscent to me of what we were dealing with about a year ago. Actually, a year ago to date almost. Riding over here on this area, everyone was talking about the 50-simplement average on the weekly coming in right around about 5,500. And Bitcoin tested it a few times, pulled back. Everyone got really, really scared saying that we're going to go back down because that's what rejected in 2014-2015. Little do people remember that anytime you grind out a major area like this, typically is bullish. So I do think that as long as Bitcoin kind of stays in this region right here, between and just kind of hovering and putting another potentially higher or low as it stands right now in the mid-8000s, more or less okay. And probably get another test back up to that too. And it's a moon average somewhere around low 9000, upper 8000-ish region. So, Charlie, what's your take of the situation? Did you follow the Bitcoin latest price movements like the drop on Sunday? Do you agree with Eric's analysis? What's your take? I don't think that I think those sorts of drops are just a natural phenomena within any price market actually. And any market when it's having a sharp move like we've just seen in Bitcoin. So any market that's going to have a good run like Bitcoin's had over just the first few weeks of January, they're going to be flushouts. And that's the main point that the market is constantly trying to flush out weak hands. That's just something that happens across any market where there's equities, forex, cryptocurrencies, whatever it might be. So I don't see anything in that. It's just a way of just stopping some traders out in the short term, short-term traders. But in the longer term, like Eric just said, interestingly, Eric, your trend line on your chart, it's showing that it's bashing its head against that trend line, whereas on mine, we've already got a breakout there on my charts. Must be a difference between the I would guess that you're probably using Wix rather than bodies, as it looks like. Yeah, yeah. Okay. And so it's just the way the technical analysis is and different people look at things slightly differently. So I see this market, I was looking at this, oh, fun enough, the last time I was on here, we were talking about this weekly chart here. This is the Bitcoin futures chart, by the way, that's why there's only so much data here. But on the weekly chart here, we pulled back to the weekly 50, oh, good two months ago now. And last time, I think I was on your program, I was talking about the fact that this should be a decent support area. And it took a long time to get going, but it's finally getting going. So I think we can talk about that more in a moment. But in the short term, those sorts of moves are just ways to cut out the short term players and get them stopped out as far as I'm concerned. So Eric, what do you think, do you agree with the fact that this is just weekends being shaken out? Yeah, it's no secret that this market is very immature. And it's very over leveraged at times. We have 100X leverage, I mean, even up to 125X leverage now in Binance. So people getting a little bit frothy at the mouth after a nice $2,000 run off the lows, likely to get shaken out on those positions. I think it's pretty damn classic and very par for the course for Bitcoin. I don't really see anything too much out of the ordinary here. I don't really get even medium term little bit shaky on Bitcoin as long as it's above about 82 to 8,300ish region and maintains that daily uptrend that we're looking at right now. Can you maybe briefly underline what is your outlook for the medium term, Eric, for the medium term? Yes. Yeah, medium term. I mean, we kind of just touched on it a second ago. I'm looking for Bitcoin to kind of consolidate a higher level as long as, again, as long as it holds this 8,500ish level puts in another higher low on the daily right here. I think that is going to actually give a nice breakout above that 200 simple and test likely around the next weekly high, which is 9,500. That's where things actually get really interesting for me, though, because Bitcoin's weekly chart, Bitcoin's weekly trend in general, has been your best friend, really. Anytime that we've had a reversal, a confirmed reversal on the weekly, those are massive moves to the upside and to the downside. In this case right now, we're technically still in a downtrend on the weekly, which does accurately represent the macro for Bitcoin. If we can get that next leg up, then I would be looking for a pretty strong outlook for at least the beginning half of 2020 or whatever year that we're in right now, as that would probably open up the doors for a move back up into the five digits. From there, we'll have to come back and reassess, but that would be more or less good and really send the macro trend to the upside. Okay. Charlie, what do you think? What's your takeout for the middle term? I'll just put my charts back up again. On the weekly chart here, and I'm having to use the weekly chart if you want to know the general trend. I'm in agreement generally with Eric there, but for me, this isn't actually in a bear. You can call this a bear trend since last summer, but for me, this is just a pullback. I see this as just a pullback to typically to that weekly 50 moving average. It's held that weekly 50. I do see the potential for this to run back up to 12,000 area. However, I think I said this last time, I don't necessarily think that we're going to just keep going powering on from there. I still see the next year to 18 months. There's just too many retail traders out there getting too excited, especially after last year and the early part of last year, about Bitcoin. I think it probably needs to form a range, a longer term range on the weekly chart to just bore some of those investors out there and just shakes those investors off. The way that I see this is that, yes, I do see some more upside coming over the coming weeks and months, but generally speaking, I think we'll have upside and then we'll have downside again. Just to the point where a number of players will just get bored and move on and then there will be a fast move that will come and a lot of people will say, oh my God, why was I not on that move? They've already missed it. I still think this has got a long time to play out from a sentiment perspective. The market has done a good job of shaking out a load of people obviously into 2018 and 2019, but I think there's probably a different type of shakeout now. I think this is an accumulation phase for people who can just sit on it as investors. I think it's a great time to do that, but as traders, you've got to have a longer term view because otherwise you will just get shaken out. As far as I understand, you both agree with what Peter Brand said in our last video. They don't think it's time. They all now want to sit and buy a break back to $6,000 or $5,000 and they've missed the bottom. During that bottom, I think you had a lot of people accumulate who were strong hands. The weak hands are out. The strong hands own it. I can show a couple of fundamentals on this one actually that speak to that point. One of the things that really stands out to me here from a fundamental perspective is the hash ribbons, which we've been following on my channel quite frequently for the last month or two. Any time that we've gotten a buy signal on these babies, Bitcoin, while it's not a good timing of momentum, it's actually pretty terrible timing of momentum, it does accurately over the 9, 10-year history of Bitcoin always suggest, not always suggest, but always imply that the low had already been put in prior. On a daily closing basis, Bitcoin does not violate that prior low. Just go back and verify this. You get the buy signal right here. The low from prior was in 3,100. Again, terrible timing signal, but the momentum afterwards does continue upwards and onwards. Same thing running over here. This one actually happened to be a pretty damn good timer. This one over here, again, low was in from prior over here, but as far as timing goes, terrible. Same thing with this one, even worse timing, and same thing with this one. Again, the low was in. Bitcoin does not close lower on a daily closing basis. Same thing over here. Actually, pretty good timer. These ones decent as well over here, and this guy running over here. We did get a buy signal after the 6,400 low was put in. What was it like a month ago now? I think that was middle of December. Yeah, a little bit more than a month ago now. I would think that that does hold true. I mean, we're talking about a piece of edge here that has 9, 10 iterations now, and that's as a trader. I mean, that's good enough for me. Doesn't mean that we can't come back down. In fact, to Charlie's point, what he was speaking about earlier, do we create a range? That's just absolutely devastating to day traders and just people in general, and boards of shit out of people. Very possible, because we could come back down to the prior lows, but I wouldn't expect Bitcoin to close below the prior lows just based upon that. I do think that people got essentially front-run here. I know that there was a lot of clout on crypto Twitter and whatnot, people talking about 6,000, 5,000, and I think it would be very poetic if this market didn't give it to them. Charlie, do you have anything to add? Do you think that we actually touched the bottom? Again, coming back to the weekly chart, and I'll go back down to the daily chart as well, but on the weekly, there's a couple of areas of caution. Anyone calling for a price to go back down below 6,000 when it's already done a key test of a key level to me, technical level. If it was to come back down and breach that 6,500 I'd be quite concerned for the, certainly for the medium term of Bitcoin that it could then start to set out 5,000 below, but I'm not necessarily expecting that. One thing I will say is that if you can see on my chart this blue moving average, I've just got a few moving averages on a chart, a trade very simply. I've got an MACD down the bottom and some moving averages, and then just technical analysis goes on top of that. This 20 moving average that I have on here is still facing down, and quite often when you've got price moving in one direction, but a 20 moving average still facing down, then it's just a sign that the market could pull back a little bit. That's all I'm talking about in the short term here because it's a weekly chart. Until that weekly 20 can flatten off, there is the risk that Bitcoin could just do another bit of a pullback. If we go back down to that daily chart there, then there is the scope for a bit more of a pullback on the daily chart, but generally speaking, the way I look at Bitcoin here, technically since coming down to that weekly 50 zone, I see no reason why it has to go back down there. For me, if I was technically trading Bitcoin right now and I wanted to be in, then I would just be looking at any little pullbacks as opportunities to get along. That's how I see it, but certainly in the short term, looking at that weekly chart, there is the potential for a bit of a pullback, but that would only be a pullback into, again, if I go back down to the daily charts, well, I can pull back anywhere down to what, 8,000 area easily, even into the upper 7,000s actually, because that would still be above its 50-day moving average here. That's still technically bullish as far as I'm concerned, so any pullback in that whole zone would be, in my view, a buy zone anyway, so I have no issues with that. Peter Brand also said that for everyone who is interested in trading Bitcoin, they should have at least 10 to 20% of an ownership position into Bitcoin. Do you agree with this analysis, Eric? I'd have to understand the specifics of what he's saying. Does this incorporate all different types of trading markets, or is he just talking about cryptocurrencies in general? I have a strong amount of respect for Peter Brand, so I'd imagine he's probably talking about all different markets, which I'd more or less agree with. Bitcoin's an extremely volatile asset to begin with, so I don't need all that much in it. Traditional markets are very tradable right now. Forks is extremely tradable right now. 10 to 20% is even would seem a little bit high on the higher end to myself. Yeah, I agree. I would say 5%, but rather than 10 to 20%. 5%. Yeah. As an investor, Bitcoin is still, the potential upside gains are huge in it, so you don't actually have to have 20% in something if there are big upside gains. 5% you would still do very well if you were talking about from an investment perspective. It's the same with, traditionally, people have always looked to invest into the likes of precious metals and gold, and yet you don't put 20% into gold. You put 5% of your entire portfolio maybe into gold. You don't ever go too heavy, so for me, 5% to 10% max, but that's, again, I think for most people, investing is a very personal journey, and you have to be able to say to yourself, if I put 20% of my assets into Bitcoin and it doesn't work out for me, how am I going to feel about that? And if you ask yourself these key questions, sometimes the natural answer will present itself and say, well, actually no, because if I put 20% of my assets into Bitcoin and it fell down to 5,000, how am I going to feel? Actually, no, but if I had 5%, actually, I'd be okay with that. I'd probably still be able to write that out, but 20%, maybe I'd start to get panicky. There's your answer. Eric, do you have anything to add to what Charlie just said? I'd more or less agree. Even 10% to 20%, like Charlie said, is a little bit on the higher side in my opinion. I mean, if you truly believe in Bitcoin and what it's kind of setting out to do, you really don't need all that much in it, and it seems to me more risk than anything else. So I think anything around 10% is probably fine. Recently, the Chicago Mercantile Exchange released its own options contract for Bitcoin, which have doubled in terms of trading volume in the first week after launching, so which is quite remarkable. Do you guys trade Bitcoin options? And if so, what role do these options play in your everyday trading activity, Eric? Yeah, so I have been testing out options on OKX. I've traded options on other exchanges before, and I used to be a market maker in equity options. So with regards to Bitcoin options, they're very interesting because there's actually a ton of opportunity in them, because really, and I'm thinking from the perspective of a market maker, there's really not a good model to price these things right now. So as a retailer trader, you actually probably have one of the more decent advantages in these guys right now. So for myself, it's not a huge part of my trading right now because I'm not really sold on exchange. I don't really think there's any really great options. In fact, CME seems to be the only good option that you can really trust. So what I'd say about that is ideally, it would be, because I like to manage my risk with options. If I need to cover a position, I'd much rather do it with options than just like trading a futures position or having some sort of a static stop loss. It seems very elementary to me. But if I could, yes, absolutely I would. And I imagine it's just a matter of time before most exchanges get their things together and it becomes a much bigger thing and much more widely available. So at that point, maybe in like a year or two, I'll probably be fully into it. So basically, you're saying that right now, there are not enough options for trading options for you to get fully into it? Just the exchanges aren't that... I want to give CME some time to kind of figure their, get some more people on and get some more... It's still really, really small is what it is. That's kind of my point. You want to give it a little bit of time to kind of prove itself. And as far as the other exchanges, like the OKXs, the derivatives, the God forbid, anything outside of that maybe, that has like operates off a web browser. It's always a trust issue. Ideally, one day, we'll have like American style options for Bitcoin. That would be a massive advantage. Right now, it seems to me that all of the options are settled European style. So that's a little bit less enticing to me as well. But I think it's just a matter of time before you see these listed on all major exchanges. And that's really when I think I'm going to feel much more comfortable getting involved in something like that. Charlie, do you trade Bitcoin? Yeah, I'm not going to have much to add to this because I don't trade options anyway. The one thing I would say for retail traders out there, do they really need to be using options on something which is a fairly volatile at times market anyway, and then adding further volatility to it? Because the average retail trader doesn't necessarily use options in a hedging way. They're using, they're just buying straight calls or puts or whatever. So they're taking a lot of risk there. So for me, I think it's probably not the right thing for most retail traders anyway. They're just going to, it's just the faster way to blot their accounts. So you're saying that now you're talking about unsophisticated traders that are not able to handle this kind of sophisticated financial products or is it? I think, yeah. I mean, unfortunately, most investors out there are what I would call unsophisticated and have no business going anywhere near some of the more sophisticated products. Don't get me wrong, for people who know what they're doing, yes, absolutely fine. But there's a lot of people out there thinking, oh great, I can get more bang for my buck. I'm just going to put a call option on Bitcoin here. And then Bitcoin goes and dumps 800 points very quickly. And then they just get wiped out. So for the average person, I would say it's probably not the right place to be in that market. They don't need to be then averaging, adding that extra leverage on that. So I would say probably not worth it. What's your take on this, on this, Eric? Like for, since when you started handling these very sophisticated financial products, talking about your all career as a trader? We had a great saying on the floor of Arca and it was options were created to be sold. And the thing is that most retailers look at options exactly as Charlie just said. It's like, oh, extra leverage for a lower price. They treat it as a lottery ticket. I think there's also a great statistic that like 80% of options expire worthless. I think that kind of answers the question for most retailers because most retailers are only buying options to begin with. They're not selling them. They're not using it to cover which in that case, if you do spend even just like a few months learning options, they become the way to cover. At least in my opinion, there's no better way. Using both time and also decay on your side. That's a huge advantage that you can have. But the problem is that as Charlie said, most people don't really see it in that same vein. They see it as like an extra way to get, eke out even more leverage, which is not really necessary on an asset that already has 100X spot trading and trades in ranges of multiple hundred dollars sometimes per day. You don't really need that. So in the past few weeks, an altcoin Bitcoin SV has been pumping quite remarkably, doubling its price. Then it fell down again very abruptly. Now it's pumping again a bit. It's all seems to be connected with the lawsuit involving Dr. Craig Wright and his claims to be the original inventor of Bitcoin, Satoshi Nakamoto, and his claim to have access to a big fortune of Bitcoin. Have you been following this issue? What do you think about SV market movements, Eric? I think for myself, it's more of a distraction than anything. I'm not interested in trading SV. I'm not interested in it as an asset. I'm not interested in the Craig Wright debacle. It seems like it's just another piece of drama of news to follow if you want to busy your day with stuff that probably isn't all that relevant, at least to me. If SV does for whatever reason happen to be the real Bitcoin, as they say, then I'll just happily go on to trading that. But I'm not really an investor. I'm not really a hardware myself. So I'm happy to just trade whatever is trading the most. And right now, Bitcoin SV does not have the most trading volume. And I'm not interested in trading something that's not very liquid and doesn't even trade on very many exchanges to begin with. So I figured that one's going to sort of self out. I would have my doubts as far as this legitimacy, as far as the name of it. I would think that if it was legitimate Bitcoin, my biggest problem is the name of it. They need to really figure that one out. Bitcoin, Satoshi's vision, that doesn't really roll off the tongue if you want to roll domination. So for me right now, man, it's a non-event, not really interested in it. And if it does happen to be something, well, I'll go on to trading that instead of Bitcoin. Charlie, what do you think about all this issue? Have you been following it? No, I haven't. So I've got nothing to say on that. So I'm going to move on to the next one now. Nothing to say on that. Okay. How crucial is margin trading in your day-to-day trading activity? And what's the main difference between margin trading crypto and margin trading other more traditional kind of assets, Eric? Margin trading is imperative to my day-to-day trading. I mean, if you're not trading on margin, you obviously can't short and you won't be able to play derivative products like futures like options. So that would just destroy my model for trading right now. And what was your other question? How is it different from traditional markets? Yeah, exactly. Margin trading on Bitcoin is a little bit different from traditional markets because you get this insane amount of leverage, which creates these insane swings as people get shaken out left, right, and center from these overleveraged positions. There's absolutely zero reason why Bitcoin needs 100x leverage. In fact, it doesn't need, it really doesn't need any leverage. At most, it maybe needs like 4x. When I was a professional trader in traditional markets, we had up to 4x leverage, essentially, on our equity. And even that was considered like kind of crazy, especially when you're trading options on top of that, of course, because it just gives it a little bit more up. But you have to realize that traditional markets, they're trading in very small percentages. Bitcoin can trade in multiple percentage points per day on a boring day. We're just looking at it over this past week, over the past two, three days, which Bitcoin's pretty much been in a straight line. But in that straight line, if you actually zoom in, there's about a 4% range rate there when Bitcoin's pretty much asleep during this last little, and if someone's listening to this in the future, it was just the holiday Martin Luther King Jr. Day yesterday, or sorry, two days ago. And so not all that much action going on. So in my opinion, the leverage is different because it's like a birthday cake that you don't need. But you can just get fat off of it anyways. Charlie, what's your take about this? Do you consider margin trading like an important part of your daily-to-day trading activity? And what's your take about the difference between margin trading Bitcoin and general crypto and margin trading traditional types of assets? Yeah, I mean, as you know, I mostly trade FX products and futures products. And so margin for me is important. I don't have to take on a huge amount of margin. And we've seen in the FX markets over here in Europe with the new ESMA rules that margin requirements have come right down. But they still offer a 30-times leverage. But that's fine in the FX world and the FX space. And I've always said to people, well, you don't need 100 times or 300 times leverage even in FX. And like Eric correctly said, FX might move 0.3 of 1% in a day or half a percent in a day on a decent day, whereas Bitcoin can move in much bigger multiples. So people in the FX world might need a bit more margin requirement, but not still not 100 times, even though they're offered it. And it's funny, you see people going to all sorts of different brokers all around the world just to get 300 times margin. You think, what are you doing? You'll never get your payout anyway, because they're probably in some weird jurisdiction and, you know, they're just a scam in many regards. So margin is important for a lot of people. Just give them a little bit more bang for the buck. If they've got $10,000 in a trading account, then at least they can get a little bit more bang for the buck on their trading. But when it comes to trading Bitcoin likes, then you don't need that. You don't need all that extra margin. You've got a market which swings around enough as it is. But I see this as exactly the same as I remember back in the 2010, 11 when the gold market was really frothy. And everyone was trading gold back then, because gold was super exciting. And they were trading trading gold on loads of margin. And of course, for periods, some people were making a lot of money. But of course, as soon as gold topped out in 2011, started coming back, people started having their hats handed to them. So as always, you have to respect margin and don't over leverage. You're over leverage. It's only going to be a matter of time before you lose. That was a very cool discussion, guys. Thanks for being with us. Yeah, man. I think for having me on, it's been an absolute pleasure meeting Charlie over here and massive amount of respect. Very cool. Likewise. Yeah, really enjoyed it. And good to listen to your view, said Smone as well, Eric. So yeah, really interesting as one. Thank you very much. Here with us today, Eric Crown and Charlie Barton. Thank you everyone for watching. And don't forget to subscribe to our channel for more exciting content.