Summer shorts: soaring NANO prices give traders a chance to bet against the rally

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When Elon Musk’s tweet “ Bitcoin is bad for the environment ” caused a flash crash of BTC and the majority of altcoin prices earlier this week, a handful of digital assets made their way into the opposite direction, making huge gains in the middle of the Red Sea.

These are the tokens that sell as eco-friendly capitalizing on the immediate instinct of investors that Tesla may soon switch to an alternative, green cryptocurrency.

Moment of unsustainability of NANO

One of the biggest winners of the day was NANO, a decentralized cryptocurrency that relies on a consensus algorithm similar to Proof of Stake and underscores its status as a highly sustainable form of money. Spurred on by news of Musk’s quest for greener pastures, the coin nearly doubled its price from $ 8.44 to $ 16.32 in just 12 hours.

But how durable was it a race? The price action triggered by Musk’s escapades can be dramatic, but it is almost always short-lived. For those traders who bought the news and rushed to open a position on NANO following Elon’s tweet, it was a long 12 hour period. How far can NANO go? Is it still the moon? When do I take profits? Will he fall soon?

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The VORTECS ™ Score, an algorithmic analysis tool exclusively available to members of TBEN Markets Pro, would not be able to definitively answer any of these questions. What it could do, however, is sift through years of historical data and determine whether the combination of market and social conditions around the coin resembled those that preceded a sharp rise or fall in prices in the coin. past.

In the case of NANO this week, the VORTECS ™ score line had been neutral before the May 13 pump. Naturally, the underlying market and social conditions did not seem historically ripe for a rally that would soon be triggered by some type of ex-machina event.

Then, in the middle of a tweet-induced price increase, the VORTECS ™ score started to turn red, suggesting that the model detected a downtrend in market activity (first red circle and boxed in the graph ).

Despite a drop, there was a second price spike (second red box) which coincided with an even more negative VORTECS ™ score (second red circle). As indicated by the yellow star, this second peak was followed by a significant drop in prices.

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The low score of 18 was recorded as the price of NANO was still on track to its second high of $ 15.82, shortly before it reversed and fell below $ 11. If history doesn’t repeat itself, in this case, it rhymes.

Short positions 101

Crypto traders could implement the recent NANO rally in several ways. The first is to react quickly to the news and open a long position in the hope of taking profit before the trigger’s impact recedes. Another is to short the asset while it is still flying high – in other words, betting that the price of the coin will go down.

Short positions are often opened using borrowed funds: in a classic scenario, an investor would borrow the asset that he expects to decline, immediately trade it at the current market price, and then buy it. again for less, pocketing the difference. Today, many cryptocurrency exchanges offer derivative contracts that allow users to sell crypto assets without touching them.

You can review this TBEN guide in long and short positions to recap the basics.

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While the VORTECS ™ Score does not tell investors when to go long or short, it can provide a useful indication of historically bullish or bearish conditions for a particular coin – information that can potentially be profitably incorporated into a trading position. trading strategy.

TBEN Markets Pro is available exclusively to subscribers on a monthly basis at $ 99 per month, or annually with two free months included. It features a 14-day refund policy, to ensure it meets subscribers’ crypto-trading and investment research needs, and members can cancel at any time.

Important disclaimer

Opinions are those of the author. TBEN is a publisher of financial information, not an investment advisor. We do not provide personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk, including the risk of permanent and total loss. Past performance does not represent future results. Figures and graphics are correct at time of writing or as otherwise specified. Strategies tested live are not recommendations. Consult your financial advisor before making any financial decisions. Full terms and conditions.