Today HIVE had a nice pump where the price of the token went from $0.5 to around $0.67, which is over 30% in value... As we have already seen this kind of situations from HIVE, most of us expected (and expect) that the price will go down where it was, or at least near that price...
So, the general idea of "using" these opportunities is to sell HIVE high, and later on, when price goes down, buy it back... I have done this a few times in the past, but I have decided to play it a bit differently this time...
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My general idea was always to accumulate more HIVE, and I'm still pursuing that goal, but I had something else on my mind for this time... As I'm not in a hurry to gain more HIVE and I don't want to RISK my accumulated HIVE, I have decided to put aside some of the profits into the SWAP.HIVE:SWAP.BUSD diesel pool...
Why is it less risky? Well, I would sell HALF of my HIVE for BUSD, and provide liquidity into the diesel pool 50-50... If I would sell ALL my HIVE and the price stays up, I would stay without the tokens (yes, I would have BUSD, but that's not a "winning option" in my view... 😃)...
I was following market conditions today very closely and compared them with previous pumps that HIVE had... There was a pattern that has been followed most of the time... My main focus was following the trading VOLUME as the main indicator of the TOP of the price in our case... While volume was growing, it was a sign that the price will go up... When it stopped, the price started to fall...
Screenshot from https://www.tradingview.com/
If you check the chart above, you can clearly see how volume (bars at the bottom) was declining around 18:00... That was the moment when I sold my HIVE tokens... Not exactly at the top, but very near to it... around $0.657...
On a simple example of owned 2000 HIVE BEFORE the exchange, I will show the possible gains if you were sold it all, or just the half like I did...
Value BEFORE exchange:
2000 HIVE = 1000$
1000 HIVE + 500 USD (value of HIVE and BUSD in the diesel pool IF I have provided liquidity BEFORE the pump)
Value AFTER exchange:
1000 HIVE = 657 USD
Provided liquidity:
1000 HIVE + 657 USD
Example IF the HIVE price pulls down back to $0.50:
1146.3 HIVE + 573.15 USD (value of HIVE and BUSD in the diesel pool)
If I would exchange USD back to HIVE, I would receive 1146.3 HIVE, which makes a total of 2292.6 HIVE, or 14.6%... Which is less than I would gain if I have exchanged ALL HIVE for USD and later exchange it back...
If I exchanged all 2000 HIVE at $0.657, I would receive $1314... When (IF) the price of HIVE goes back to $0.50 and I buy them back, I would receive 2628 HIVE, which would be over 30% in profit...
But, as I said at the beginning, I had an idea to go into the diesel pool which will give me additional profits in the next days/weeks/months... Diesel pools have REWARDS for providing liquidity, but also, they have FEES that are directly paid to liquidity providers!
A lot of people forget about the FEES passive income and the APR which can be very juicy, especially when we have a lot of volatility in the involved pair... At the moment when HIVE was going up and down, the APR (on fees) was over 35%!!! I know that it will not stay on those levels, but still, it is a nice (additional) income source... Today, my position in the HIVE:BUSD diesel pool has earned almost $4... Not too much, but it will continue earning in the future too...
In conclusion, I could earn more by exchanging ALL my HIVE and buying it back later, but I have chosen the long-term solution for my investment... In my opinion, it is less risky and it will "work for me" even when I'm sleeping... 😃 without stressing too much...
I have calculated these numbers using Impermanent loss calculator... Also, you can find details about the earned fees for diesel pools on Tribaldex exchange site...
None of this is financial advice... It's just the way how I traded this HIVE pump today...
Thank you for your time,
ph
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