Tis the Season!
I hope everyone is profiting in the current market conditions! We have seen some great direction volatility with resistance after resistance being smashed by the Bitcoin bulls. Ten thousand per BTC was a major milestone for many different reasons that we outlined here. Reading this previous blog post would provide a lot of context for why we are SO bullish on BTC in 2020 and beyond.
Long Term Perspective
Time flies, because now it is August! This means we can analyze and contextualize the monthly candle from July. In fact, this is the highest monthly candle for BTC since 2017. Lets let the chart speak for themselves though:
- Surpassed the downtrend connecting the wicks on monthly contributing to the lower lows.. This is very bullish
- Broke above long term supply zones (resistance) in and around the 10k range. This is an important zone for a different reason which we will discuss later.
- The next major resistance zone that I am watching is around 14k. This is as high as we got last summer, and looks to be in contention this summer.
Hopefully you have been averaging into BTC/crypto as the bear market progressed over the last weeks/months/years.. As discussed earlier, the 10k range is crucial because it represents points in time where Bitcoin could've been an unfavorable investment..
Days where Bitcoin is not a profitable investment are shown in red:
This really speaks for itself and represents a larger force in play that influences the market in a negative way: FOMO.
Cryptocurrency is a hype drive market. Similar to any asset class where speculation is the name of the game, investors can burned. There are commonalities between these individuals, so lets talk about them!
Mistakes to Avoid:
1. Recognize your risk. How much money is on the line? Do you need this capital? What % are you willing to lose for an opportunity?
2. Never trade crypto without a stop loss. The only exception here is for long term trades involving long term storage like a Ledger. The market is the wild west, and its best practice to always have your trade protected.
3. Recognize fomo. Know what it feels like in yourself, what it looks like in the market, and how to avoid having it punish you. Taking trades should not be exciting, it needs to be clinical.
If you find yourself getting excited/anxious from a trade, you probably have too much capital on the line to be fully comfortable with what is going on. Recognize and correct these emotions as appropriate.
4. Patience Pays! The opportunities in the cryptocurrency sphere are endless. There will always be more pumps and volatility, but the next dump might be around the corner. Staying patient is at the foundation of successful crypto investors.
1. Average into the assets you like. Periodic buying is one of the most effective and simple strategies available. Take advantage of the automatic purchasing features. It is a life saver! DCA is so effective because it ensures you always have market exposure and can optimize your average price while still having upside exposure.
2. Stop Loss Adjustments.. This strategy is great when you have a trade in the profit and want to remove risk from the table. Moving stop loss above your entry provides risk free exposure and allows you to capitalize on further upward movements. Keeping it two supports below current price and adjusting as appropriate gives you breadth and allows you to "let your winners ride".
3. Periodic Selling! One of the commonalities between people that get burnt by crypto is refusal to sell when in profits. Successive buying and reinvesting allows for expansion of the effective trading capital. Never be afraid to take profits because its better to be in cash then wish you were in cash.
4. Don't be gullible. As these profitable times of market volatility come, so do the nefarious individuals. Don't fall for the scam of uber small cap alt coins "with a promising project" or "great team". Use your investigation skills and understand WHAT you are buying BEFORE you buy it.
We're rapidly progressing towards the shift in supply/demand we have all been waiting for. Don't let doubt cloud your vision, keep objective at all times and protect that capital. Likely you've been waiting with us for years, and are just as excited as we are! Don't let doubters get to your psyche, they're the one holding dirty fiat! ;)
Another thing to consider is the rapid monetary expansion. Keep sound monies in your wallet at all times, you net worth will thank you!