The Right Thing At The Right Time
Recently, I addressed the aspect of taking profits vs continued accumulation in a bear market. Many influencers advocate the idea of realizing profits along the way. I prefer to adopt more of a long-term approach, and rather increase exposure during corrections, as opposed to trying to identify local tops. As mentioned previously, identifying these levels can get rather tricky in a bull market.
For instance, $38K should have provided more of a reversal. However, it offered not much of a problem at all. Not only that, but BTC then went on to shatter $40K, $42k, and even $44K. Furthermore, a retracement for $BTC does not necessarily imply a reversal for altcoins. Although some may correct in conjunction with BTC, many will choose to travel their own unique path. Many investors tend to be unaware of this dynamic.
So, let’s look at some data, and see if selling your altcoins at Bitcoin’s local top would have been a good move or not. I am going to use some of my recent altcoin picks as an example, for the simple reason that my suggestions are in light of my decisions and positions. Firstly, we need to establish where these coins and tokens were trading when BTC was trading at $44K. Don’t look at corrections over the past 24 hours.
What The Data Has To Say
This is especially true, regarding percentage points. What is more important is how much these projects have rallied or corrected since $44K. So, let’s take a look at some historical data on CoinGecko. According to CoinGecko, on the 6th of December, BTC opened at $44,106 and Raydium opened at $0.42. Now, let’s look at where they are trading now. BTC has taken a dive and is trading at $41,210, while RAY is trading at $0.63.
This is entry-level mathematics. Choosing to sell your RAY when BTC topped out at $44K would have cost you 50% in gains. Furthermore, RAY has peaked as high as $0.81, which is almost 100% up from when BTC was trading at $44K. This has all taken place within several days. Selling Bitcoin’s top would have been a foolish move, not a smart one. Furthermore, a marginal increase in terms of your allocation makes greater sense. The image below reveals what a RAY investor would have missed out on by selling at $44K.
Altcoins run hard, they also run unpredictably hard, making it too much of a guessing game. I advocate building, as opposed to profit-taking. A small top-up at these levels is a good idea. A more significant buy would be on the cards if alts were to correct deeper. Let’s take a look at another altcoin pick I published eight months ago, Injective Protocol. We have already established Bitcoin’s price action.
Now, we just need to take a look at INJ. On the 6th of December, INJ opened at $17.16 and is currently trading at $24.57. Even though INJ is down 7% for the day, it is up more than 40% since BTC topped out at $44K. Unskilled and new investors are perhaps saying the following without looking at the broader picture.
You see, INJ is down 7%, I should have sold when BTC was trading at $44K!
This is exactly why the dedicated are the true winners. They are assessing their positions… structuring additional entry points, and monitoring true gains, as opposed to a daily move, which can oftentimes be very deceitful. I am more focused on allowing my alts to run, and then to increase allocation, if possible, when corrections do arise.
Final Thoughts
At the end of the day, the average Crypto investor thinks he is a lot smarter than he truly is. This deception is further enhanced in a bullish market. A high tide lifts all boats… even those that are unable to move! Establish a strategy, and then stick to it. The market will eventually reward you. That’s my view anyway. All the best, catch you in the next one!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.
