Buy the Panic, Sell the Hype. Easy.
Buy the Panic, Sell the Hype. Easy.
The crypto market is at a discount. Take advantage.
The best time to buy Bitcoin was always when it was pronounced dead. The best time to sell it was when your mother called you about buying it.
This advice is as old as the markets. Now that Bitcoin is down by over 20% from its recent highs, it’s time to pay attention and execute this simple strategy.
Let’s dive in, TLDR at the end.
A sensible investor playing with cryptocurrencies should always have some liquidity on stand-by to speculate on opportunities such as the one we have today when Bitcoin and the overall market is at a discount.
Corrections between 20% - 30% in a bull market are nothing to be scared of. They are normal and should be expected. Considering this bull market has just started, deploying more capital is the most rational thing to do, especially when the market offers such discounts.
No one can tell you where Bitcoin will bottom during this correction, but the chart offers us some good hints: 38k, 36k, and 32k are the most important support levels right now. 40k is currently acting as resistance. As long as it holds, expect lower levels.
If you invested in altcoins, you should already have some profits booked, particularly if you held coins like Solana that already did a 10x. If those profits are significant, you have several options on the table. I already suggested some in Alpha Post 9.
In this particular case, I’ll assume that you are still bullish in the next year or two like me. This means, if you sit on some cash right now, it’s time to deploy it. How you deploy it should be based on your risk profile.
High Risk - High reward? Look into altcoins
Lower Risk - Good Reward? Look into market leaders
I won’t tell you here what altcoins to buy, but rather, how to buy them. If you insist, I already gave you a list of altcoins I’m watching in Alpha Post 10. Sufficient to say is that BTC and ETH are the only market leaders that matter, all else falls into the altcoins group or high risk / high reward.
For simplicity, I will use Bitcoin as an example in this post. The trigger to start buying was when the 40k support level was lost. Why?
The price fell by over 20% from its recent highs, this is significant
The price made a lower low compared to December
Bitcoin broke below a key psychological level
This means you have a great opportunity to buy discounts that you would not easily get in a bull market. Lets make one thing clear, Bitcoin remains in a bull market as long as the price is above 30k. This brings me to a key point.
If the above assumptions are correct, buying between 40k and 30k is your golden zone of opportunity. Make it count and be smart about it. This is why I recommend you start seriously considering dollar-cost averaging (DCA) down from current levels. This is not financial advice of course.
You don’t FOMO buy in one go at $39,999. No. You set limit buy orders at fixed intervals until 30k with the note that 30k looks unrealistic now. Nevertheless, coming back to my earlier point, always keep some cash ready for such opportunities. Then you wait for your orders to trigger. Easy.
In my opinion, any price between 38k and 34k looks like an excellent entry so long the uptrend remains intact. That’s a 10% variation in the price. If you average out around it, you get 36k which is a key support level. That’s an excellent entry if this bull market continues.
If you want to show conviction, then you can increase the size of your limit buy orders at lower levels. That means buying twice as much at 34k than at 38k, for example. You can keep your limit orders equal or skew them in favor of lower prices. This is up to you. Always think in percentages, not fixed amounts. Take 100% and split it in 5 to 10 limit buy orders. Then place them on the orderbook.
If you buy in clips of 10% at 38k, then aim to buy in clips of 20% under 36k until you’re fully loaded. If Bitcoin starts acting bullish, your signal that you won’t get any lower levels will be easy to find. That’s when the price makes higher highs. Right now, that would be a price above 42k.
You can aim to deploy the rest of your capital then or keep it as future liquidity for other opportunities. This is essentially the opposite of how you should be taking profits once Bitcoin goes above 100k, but applied to a market correction.
Note that in the case of Bitcoin, we know quite well where we are in its cycle. However, this is not so easy with altcoins. That’s because altcoins have their own cycles and are easily moved by market leaders. When you base your strategy on a set of assumptions, triple check them, as a wrong assumption can mean lost money.
Above all, try to avoid buying FOMO or euphoria. Instead, buy panic or when the market is dead. I love buying when it’s quiet and people forget about crypto. That’s also an excellent buy signal. It usually comes after the panic phase and is usually called despair as shown below. These happen in bear markets.
If you ask me where we are now in this bull market, we’re somewhere around the media attention phase. Prices are gaining momentum and this may be the last significant correction before things start going up fast.
TLDR & Tips to Remember
In bull markets, you buy discounts, not FOMO
Always keep some liquidity on stand-by to catch discounts
Any correction over 20% in a bull market is a buy opportunity
As the market leaders, BTC & ETH have the best risk profile
Buying altcoins is a high-risk business, there are no guaranteed results
Triple check your assumptions, they can make or break your portfolio
Dollar-cost average down to accumulate and take profits on the way up
Know where you are in a cycle or expect to get rekt
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All info is provided for educational purposes only and is not financial advice.