How to ride the tough time in crypto?
Disclaimer: Our content is intended to be used and must be used for informational purposes only. It is very important to do your own research and analysis before making any investment based on your personal circumstances.
BTC Overview
Last week there was still the possibility of a short around $46,000, but unfortunately the market did not give us the opportunity. Bitcoin is currently trading around $36,000 after bouncing off the 33–34k support area.
What can we expect now?
The technical situation remains negative with a bearish MACD and WaveTrend. However, they are both trading in their oversold areas in conjunction with price support.
On a 4 hour time frame, the indicators are positive. We can therefore expect a rebound until a retest of the 40k area.
It is possible to open a short position in this area, but the stop would be too big, which is too dangerous in a context of high volatility as we are witnessing now.
In the longer term, if the 34k does not hold, the next zone will logically be 28k. If the latter also breaks, then 12–13k would be the right time to buy back BTC.
It’s the not the first time
For those of you who have been around for several cycles, this will seem logical, but for others, it is good to remember that markets in general, and this is the same for the crypto market, move in cycles. In the case of BTC and cryptos, we could say that it revolves around the halving which takes place about every 4 years.
So this is not the first time we have seen a crash of this magnitude, we have seen much worse like the March 2020 crash. If this is your first time, here are some rules that will allow you to spend the crypto winter in a more serene way.
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1) Invest for the long term.
This is the best advice we can give to a beginner. Investing with a long-term view allows you to better control your emotions, which is the most complicated aspect of trading and investing. When you stretch out your time horizon, you win in both scenarios — when the market is good and when the market isn’t; such as what we are witnessing right now.
2) Diversification.
Diversification is the absolute weapon that allows you to smooth out and reduce the variance of your portfolio as a whole. You can choose to diversify between several assets but knowing that the correlation between different cryptos is high, it is therefore dangerous to spread your capital only between several cryptos.
3) Reduce your overall market exposure.
This is a way to diversify but using stablecoins/cash. Keeping part of your capital in cash or cash-like will not only allow you to avoid the full force of market fluctuations but also to buy back lower. HODL is clearly not the best solution.
4) If you HODL …
As we just said, HODL is not the best solution but if you’re at this point, remember one very simple principle — the majority of market participants are wrong. Hence, there is a greater chance that you are wrong too. When the thought comes to you to give up, after a year of holdup, remember that it is probably the worst option at that time.
Take for example, the case of the majority of the market that speculated BTC would reach $100K by the end of December 2021. Instead, the market went the other direction. Such wide speculations and opposite results are very often the case in the crypto market.
Most Hodlers tend to take only the position of hodling and nothing else. By this, we mean, they only believe in the buying of crypto and do not expose themselves to trading. This can be a sound strategy if you don’t have the time nor knowledge to trade but there is an even better way — diversification through both hodling and trading with the 4C Trading SMART Bots!
5) To avoid all this!
Have a strategy, whether it’s short term trading or investments. Test it, challenge it and then trust it. Always do your own research — DYOR!
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Conclusion
Without conviction and clarity, it would be near impossible to be in crypto for the long haul. If you are in it with the belief that quick and handsome gains can be made in crypto, it is a very dangerous belief and we suggest you replace that with the viewpoint of a long term strategy.
By this, it would also mean that you shouldn’t bet your entire savings, net worth or all of your wealth in crypto. Exercise prudence, logic and patience. Let’s face it — we are just at the tip of this financial revolution and we have lots of time ahead!
