Few rules on how to trade in the falling market?

In our analysis over the last few months we have looked in depth at the macroeconomic and geopolitical scenario, in one of the most difficult phases of the last 15 years. We cannot exclude that the stock and bond markets will extend their declines, dragging down Bitcoin and the crypto sector as well, perhaps to the $35K area, maybe even lower to support in the 25K area. The odds of this happening are not high, but they must be considered. I consider this area the most important and strongest level for BTC. Should BTC get there, I will buy for the long term adding to the BTC (too little) that I took too late at 15,000 and partially sold at 42,000 (before ATH).

The DXY is making new highs and this has a huge impact on all USD exchanges and dollar-traded commodities.

The coming weeks will be full of potential "triggers", starting with the Fed which could aggressively raise interest rates by 0.50% or even 0.75% as early as its May meeting.

Let's assume we face a crypto market that has been steadily declining for several days and has failed to consolidate on a good support level.

What is the best course of action in this situation?

Let's start with the golden rule of the markets, which although it may seem trivial is the key to being profitable: buy low when fear is in the market and sell high when everyone is in a frenzy. Moreover, the reasons why we decided to buy Bitcoin do not change just because the price drops by 20 or 30%.

So selling Bitcoin (and the top altcoins, for me HIVE, DOT, BNB and LUNA first and foremost) below the purchase price is an irrational action, unless you have made another typical mistake: investing beyond your means.

What to do in such a context?

Accumulate Bitcoin, HIVE and if finances allow, also the major altcoins.

The lower the price, the more purchases should be intensified, so as to significantly improve the average purchase price and anticipate profit-taking.

BTC accumulation zone

Only the amounts needed for trading should be left on exchanges, while coins purchased with a long-term investment perspective should be kept in cold wallets.

It is best to avoid margin trading and futures, as in the event of sudden declines, liquidation cascades or platform crashes, you risk jeopardising your entire deposit.

And that would be a shame, especially in case the market recovers quickly and goes up again.

Using 100X, 50X or 20X leverage is not trading but gambling, which in 90% of cases leads to considerable losses.

Regarding altcoins, in a bearish environment you can consider accumulating coins in the top 30, while the rest should be avoided.

Indeed, due to the low capitalisation, declines are much more violent than Bitcoin and a 50-70% drop is normal for small caps.

When the market does go back up there will be time to position in more speculative altcoins as they will tend to follow the rest of the industry in a "lag".

As far as HIVE or LEO accumulation is concerned, in my opinion, the reasoning is different because even if not within the TOP30 there is a lot of recent news that could push the market up, starting with the high APY of HBD, the introduction of pHBD, and the recent success of ACTIFIT.

A consideration on the technical levels and psychological of technical analysis: often they are used from the mass in order to enter on the market or in order to place the stop loss, therefore in the greater part of the cases the breakups of these levels are of the false breakout.

All that goes against the rule of "buy low and sell high" is stupid and illogical. Obviously this process takes months to generate profits and patience is a key weapon in our arsenal.

There is no need for me to tell you the end of the story.

And if drawdowns make you sad and depressed, set up a DCA plan and move everything to a hardware wallet, without paying attention to short-term price action. Concentrate on sports, family or study and forget about the market, which will do everything for you.

Remember that no whale or wall street shark will take your cheap coins unless you press the "sell" button.

Only after you click that button will the loss be real and there is a good chance that the market will come back up shortly afterwards.

There is no mysticism in this.

If you decide to sell an asset during a downturn, you are in the category of Cervus Elaphus.

Generally, when panic selling hits the market and the masses sell off their assets, the market collapses and a kind of bearish consensus is established, i.e. everyone expects the market to continue falling.

But in these cases the exact opposite usually happens, sealing the transfer of the asset from weak to strong hands.

P. S. This week the Money Supply (M2) in the U.S. was updated to $22 trillion. This is an all-time high, while we know that BTC supply can never exceed 21 million tokens.

In this context, the question we should ask ourselves is not what the price of Bitcoin will be in the future but when it will reach that figure.

Thanks for reading

Posted Using LeoFinance ^Beta