Sirwin
Sirwin

Do not Let Your Capital Melt in Turbulence

By idiosyncratic | Idiosyncratic Crypto | 20 Jun 2023


Finding a gem or purchasing your favorite crypto / asset at a discount may bring you a life-changing amount of money in the internet era. Lots of meme coin investors made thousands of dollars in a month with the help of hype and hopium.

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When the sentiment is bullish and the market is only going up (remember the times when Bitcoin was climbing up to 60K), whatsoever you buy at any price will be profitable in a short period of time because the late-comers will be buying what you sell hoping that they can trade it in profit, too.

However, when the risk appetite settles down, the investors have to become more selective in their investments and less risky assets with lower Risk / Reward ratio gains are aimed. At this point, many investors are caught in assets rather than stablecoins or fiat money.

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Assuming that an investor had 1 Bitcoin bought at $48K. When it was purchased, s/he may assume that it was a cheap trade because BTC tested $64K and it will go up again(!)

If this guy does not accept 5% - 10% loss in this trade, it may end up losing $30K in "unrealized loss". Actually, when we assume that the guy accepts the mistake and sells BTC for 10%, then more than 42-43K will be the capital to buy BTC around $17K - $20K

In the second case, the capital would be enough to buy 2+ BTC whereas the first situation ends up with depression + only 1 BTC for $48K.

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In the previous example, the major concern was finding the "possible dip level" to jump into the trade. Personally, I stopped seeking the bottom or the top level of investments. As long as I am close to the top or bottom (a 20% - 25% difference is bearable for me), it is a good trade with no regrets.

To be able to find a point to start the spot trades, I am using Moving Averages. First of all, I check the monthly levels, then weekly averages, and then daily for spot investments. The Moving Averages may not give the best results but they are quite useful if you are not really good at trading.

As you can see above and below, when the price closes above 20-week Moving Average, this would be an ideal point to jump into it.

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A successful purchase at 19K would bring 2.3 - 2.4 BTC to the person who would not accept the deep market drops with a single BTC in his hands. Actually, the mistake is not making a blind purchase, rather, the problem is playing against the market sentiment.

Now it is quite easy to say these things. However, every time I turned my back to the unwritten laws of crypto, I paid a lot in return. Average your investment in every local support within the consolidation range!

Imagine you start Dollar Cost Averaging AVAX from $80. You would use the vast majority of your investment to get an average around $40.

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Basically, starting around $20, then 15 and the biggest portion for $11 (if it happens) will be bringing more AVAX tokens at very low prices. You would never experience this read waterfall in the chart.

If there is no sign of consolidation in the price of an asset, just ignore it. Look for some other trades meanwhile. My personal way of dealing with the times is that holding HBD in 20% APR on Hive Savings and providing liquidity for stablecoin pairs such as USDC - USDT - BUSD on new De-Fi platforms to get some extra rewards and reach above 20% at least.

As of writing, the price of BTC is above the 200-week moving average. I do not expect the price level to be broken downwards. IMHO, the market is preparing for a price above $30K after the FED's decision on interest rates. If it happens, both the technical analysis and the fundamental side will support each other.

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idiosyncratic
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Crypto-Blogger 🖊Blockchain Gamer 🎮 https://read.cash/@idiosyncratic https://noise.cash/u/idiosyncratic1 https://leofinance.io/@idiosyncratic1


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