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The cryptocurrency markets are coming off of another major selloff. The price behavior over the last 30+ days has been different than previous runs in 2018. Fortunately, the Auto-ML system locked in a Bitcoin trade gain of 11%, which we’ll discuss below. But first, there is some important price context to consider.
Disclaimer: Past performance is not necessarily indicative of future results.
Bitcoin Price Behavior in 2018
The recent August/September 2018 price rise (as shown in the green lines below) was the longest, most consistent and stable rise yet in 2018. This appeared to have considerable promise toward a larger trend reversal.
However, these gains were quickly erased with a sharp selloff that occurred in two separate windows. These drops occurred in windows that lasted less than 5 minutes. As we’ve mentioned before, even having a stop loss in place would not be sufficient to protect against drops of this nature.
As unfortunate as these rapid drops are, they are a reality of 2018 as shown in the chart below in the red circles. So the question is how do we protect ourselves against these drops?
The New Auto-ML Algorithm is Key to Handling 2018
Recently, Crypto-ML released Auto-ML. This new feature monitors the Bitcoin markets continuously and can provide alerts any time of day. This is in contrast to the traditional Crypto-ML alerts, which provide once-daily triggers.
In case you have not yet turned on your Auto-ML notifications, we highly urge you do so. This market is continuing to show large, quick moves. As such, removing delays is highly valuable and reduces risk. This is particularly true in larger bear markets.
While Auto-ML didn’t issue the SELL alert prior to the initial drop, it still captured a significant amount of the run and locked in a 10.9% gain.
The trade details can be seen on the Auto-ML Trade History page.
Machine Learning Adaptive Capabilities
While the Auto-ML trade closed for a win, it’s looking as though the Standard Alerts will potentially close for a loss unless we see a bullish bounce. While these sharp and sudden selloffs are challenging for machine learning, traditional trade indicators, or even stop losses, we still do have an advantage at hand.
As you note on the chart at the beginning of this post, a pattern in these selloffs is emerging. And patterns are precisely what machine learning is good at identifying and modeling. It is our expectation that Crypto-ML will continue to become more clever in the ways it anticipates these sudden moves. When the open trades close, updated models will likely be released.
Where is the Bitcoin Market Going from Here?
While Crypto-ML is clearly skeptical of traditional technical analysis and the contradictory results it provides, there is a strong visual forming that shows price compression. Price has been trading in a narrowing window. Eventually, that window will shrink to a point and the current trend will be unable to continue.
What happens after that point is unknown. We do, however, expect strong volatility to continue and a potential significant movement to happen in the September-October time frame.
Recommended Action for Crypto-ML Customers
If you have not yet, we recommend you turn on Auto-ML notifications. As well, please review the in-depth information that compares Crypto-ML Standard and Auto-ML to ensure you know the pros and cons of each system.