Back in 2017, I had a super solid investing strategy that worked a treat in the run up to the top of the bull market, all those many years ago when Bitcoin topped 20K. Yes.... 20K was the ATH back then. The strategy was very simple and it was working on Bittrex and Binance - All I did was look for the flattest token (didn't matter what token) I could find, buy some, set the sell 50-100% up and wait.
Trading guru!
In a bull market when it is almost guaranteed that everything is going to pump significantly, it really isn't hard to increase the stack. However, in order to do so, it is necessary to have some capital in order to invest. Back at the end of 2017, I didn't have much and stables weren't much of a thing, so it was trading backwards and forwards between different tokens, each time trying to move more into the ones I wanted to hold longer term. The biggest challenge I had (and still have) is that once it was in something I wanted, I find it hard to spend it on investing into the next round. This slows my progress considerably.
A lot of people are worried and turned off by the volatility of the crypto markets, because all they see is the FUD in the media that makes a volatile opportunity appear a bad opportunity. That is not the case, volatility is your friend for investing, because a flat market doesn't offer much in return, unless it is paying dividends. But even dividends aren't likely to be excessively good percentage wise in respect to how much is invested. Yet, we crave security and search hard for certainty in our world, despite knowing at a conceptual level, nothing is certain. So, we invest "safe" while what we invest is handed over to people who are going to invest it in less than safe ways to maximize their potential income, using our funds.
This is the HIVE chart:
Where'd you buy?
If you bought in that long red 2020 stream, it would have been possible to make 2500% by the end of 2022, if selling at the very top. But, a lot of people wouldn't have bought because it was too flat, too bearish, not a good time... now, most tokens would have been in the same position at that point, right, so for those who had additional funds to consistently invest into the boring and depressed lows, would have been cost averaging into the lows, taking 10 to 20% losses at times, but patiently waiting for the boom month. Those momentary losses that felt bad, were only that - momentary.
So many people are scared of those zoomed in losses that they don't invest, forgetting that like most people, they aren't actually going to be trading daily, they are trading for the peaks. While they fear losing those percentages today, it means that their stack isn't growing for tomorrow - or next year.
The spikes are a double edged sword for many of us, because while some people have bought the lows and are waiting to sell, the majority are waiting for the highs to buy. And, what this means is that those with the means to buy the lows and wait, are buying in much larger volumes than those who are waiting to buy the highs. This is why when those extreme peaks form, it is going to crash so hard, because the people with the largest volumes are able to sell for a profit all the way down.
Looking at the HIVE chart for example, if I bought 10,000 tokens at the low, it would have cost me around $1000 dollars. If I was to sell at the peak high, it would have been $30,000 worth. That means that those who are buying the peak are paying far more than I paid myself for it and why they are doing that is because they are hoping that it will go up further, perhaps making another 20%. However, if they were to get the same percentage gain that I would be getting, the price of Hive would have to be around $90 each.
What are the chances??
But, people are blinded by the massive profits that others who bought the lows are getting, without calculating what would have to happen in order for them to get the same when buying the highs. $90 HIVE would have the total market cap sitting around 40 billion dollars for HIVE alone, which if this would be the case today, would be around 3% of the entire market cap of crypto. Having said that, it isn't impossible at some point in the future on the back of a massive spike, because the devaluation through inflation of fiat dollars means that the following highs can be significantly higher, meaning that on the charts, increased volatility.
Now, I am not calling 90 dollar HIVE, but I do suspect that in the next significant crypto bull (not necessarily the next ATH), 10 - 20 dollar HIVE is possible. However, it is not going to stay there, so I have to break my habit of holding what I want and taking some profits along the way instead. Then, buy back at the next flat low section, and hold again.
This is Bitcoin over the last year:
It was relatively stable between July and November before taking a 30% hit in November til mid January. That would have hurt buying the flat, right? but of course, it is around 50% up on that price and if looking to sell only at the ATH, a person buying at 16 or a person buying at 20, will both be happy people. Cost averaging in monthly though would have meant that both would end up buying the same amount, some at the lows, some a bit higher, but end up with increased stack.
What I have found over the years with people and I am guilty of as well, is that when buying, I am worried about the current price without thinking of at what price I would be willing to sell at. Going back to 2017 I didn't have this problem with the shitcoins I was buying, I just applied a default 50-100% on top, with the variance depending on my gut feelings about them, or the length of the flat. No fundamentals were known at all - I didn't even know half the tokens.
When we don't consider our own behavior based on the numbers, we aren't likely to make very good decisions, because we will more than less, hold off on buying continually, and then rush into buying when the prices have already significantly climbed and our FOMO is strong. Cost averaging through consistently buying is handling the volatility of the markets on both the up and the down side, but being scared of the daily volatility means that we will likely never buy the bottom and never sell the top. We will always be chasing for more profits, because we are comparing our gains to that of others, who bought the bottoms and making thousands of percent, while we might only be 100% up - not enough!
I am not a trader.
I am just not cut out for it. So, rather than trading constantly, I try to cost average my way into things when I can consistently, because it helps me cope with the most volatile component of the markets - Me. My emotions and behaviors are the volatility that carry the biggest risks in my trades, not the markets themselves. If I am unable to find ways to reduce my own volatility, the markets are going to be the roughest sea and me, the most unskilled captain. If we could get charts on our own behaviors and emotional swings, I think we would all be scared to back ourselves too.
I wonder....
What is my personal ATH in the future.
Where do you see yours?
Taraz
[ Gen1: Hive ]
