Crypto Analysis | Dealing with Crashes

in LeoFinance5 days ago

Good day Hiveians!

Let's talk a bit about crashes...

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As a self made crypto analyst I am still learning when it comes to understanding market movements. Well that is, if they can be even "understood". I guess what I mean by that is to be on average more right than wrong when predicting the near and long term future of tokens. While I got it right quite often there were a couple of times when I got it wrong as well (its important to point to acknowledge that!). This latest crash has caught me somewhat off guard. But does it worry me? No! We are obviously still in a bull market and corrections of 30-40% are to be expected! While that sounds like a lot it's just how the market moves.

The current crash for btc is only 22% and there is a support coming from around 40k.. so this correction is perhaps not quite done. I actually think it's going to be similar to the one on the left. It might take until the middle of March before we see more greens than reds! I expect prices to go up to at least 52-53k before another pull back.

So what's up with crashes?

A crash can be several things: it can be an opportunity to buy more of something that you think has a long term future. But it can also be a lesson about greed. Have you spent money that you can't afford to lose? If so, then a crash can be a great opportunity to learn about fundamentals: never spend money you need in the short term! It's always better to act from an investor perspective than a day trader one:

A day trader will say: "OMG, I lost 30% today!" while an investor can easily sit back and say: "My portfolio has gone up by 400% in the last 2 years, so this crash is nothing to worry about!"

If you spent money you don't "need" then just wait it out. Crashes always happen, but the real thing to look out for is market sentiment. If there is a large scale shift from bull to bear then it is time to sell. But even macro bull and bear cycles can be waited out if the fundamentals are there. In terms of bitcoin or ethereum etc. it makes sense to assume that their value will rise over time. But also here one has to stay updated:

The other day I was wondering whether my bullish outlook on ETH is misplaced. It is obvious that e.g. BNB has mitigated ETHs growth in the last months. Will there be a major shift to another coin? Perhaps. But it is also clear that BNB is much more centralized and that ETh has much more development going on. So that would be a good counter argument.

Fundamentals is something that I learned about some years back when I invested into alts that didn't have a future. It was pure speculation and .. greed. So losing money is a great way, perhaps the most effective way to learn to never invest (a lot of money) into something that doesn't have a strong basis. Of course there will be some coins that will shine at times, but the real question is: will it recover from 30-40% losses and will it still be around in 1-2 years?

So I will make one prediction today: If you have invested in btc, eth, hive, defi coins etc. you will be fine! Let's have another discussion in a month or two and see where we stand. I bet we will be in the greens :)

 


As a general reminder: Please keep in mind that none of this is official investment advice! Crypto trading entails a great deal of risk; never spend money that you can't afford to lose!

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Very interesting! Thank you very much for sharing! Hope things will slowly but surely be on the rise again!

I can honestly say I think this correction was easy to see coming, so I sold my btc and put it into stable coins. I have been expecting it for weeks...

👍 what gave it away?

Way too much fake hype and pumping, and a pullback overdue