Dear Crypto Newbies:
I'm writing this letter so you don't have to commit mistakes I did in the past.
One of the worst things I did were really buying at the high and then hoping it would go higher because it seemed like everyone is so dying to bag the hot coin of the moment.
Buying at the high is only good when the momentum is on, but you really have to be ultra vigilant from the moment you purchased your coins at the high. Until the price kind of stabilizes at a certain level after you bought, that is the only time you can take a breather.
However, there are events in the crypto market that doesn't really follow normal logic. For example, the news today that Bitmart exchange was hacked to a whooping tune of $150 million (or some say $190 million), and then the whole crypto market took a tumble. But why?
Where's the logic, right?
Why the whole crypto slide when it was Bitmart's fault for not having good security and then other exchanges have tight ones, and they suffer too?
I mean why would Binance holders suffer too when Binance probably spent millions on cyber-security?
I think I have an explanation.
One reason I think the crypto market is so volatile is because the whales are way too leveraged. I know usual stock brokers are giving 1:1 margin, and then forex would be around 1:10 margin. I'm not sure though with crypto (as I don't use margin), but judging from the movement of fast money, it must be more than 1:10.
The ratio 1:10 means that for every $1, you can trade it for $10. So if these whales have $10 million war chests, then their buying power is actually $100 million.
It should be good, right, for common folks like me as I buy a hot coin, and then these whales leverages it and keep buying to push up the price.
But then some bad news broke. These whales have then to protect their funds by getting out quickly, and so they have to dump it even for little profit or even breaking even, or even a little loss.
So I think now, a hacking incident like with what happened with Bitmart is enough to scare the whales.
Okay, another tip, since you read up this far, one clue how to know the market is okay despite the slide. If you see most coins are down but then Bitcoin is holding up, the market is fine. If Bitcoin is slightly down, that is still fine. However, if Bitcoin is down like 20%, then that is the time to be really scared. Most likely all other coins are going down too just on the basis of Bitcoin being sold off.
Going back to the importance of buying low, as you can see, each coin has their own graphs. You should be able to see the range they trade in. When you see them on the low end, then that is a good time to buy.
Aside from it is the logical thing to do, as they say buy low, sell high, when you buy low, it kind of protects you too from sudden plummets of the market.
Most of my successful trades were from trades that when I see certain coins are at their low, I truly try to get a few bags, sometimes even $10 worth just to take advantage of it being on the low range of its trading price.
Then when the market tumbles, even though the coin I bought at the low took a little loss too, but then say I only incurred 2-5% loss on keeping that coin I bought at the low, then another coin which I can't buy before because it was just too high, but now it is on 30% discount, that is the time I transfer those low-bought coins to the more high-flyer coins.
When the whales are ready to play again, I am now more positioned to ride the waves with them.
Hope you learned something. Happy trading.
Sincerely Yours,
Metapiziks
