Crypto Bull Run, Flippening, and the Crash
The past 6 months have been some of the best for investing in cryptocurrency in general, but I wanted to wait until the crash/correction before I wrote a new blog. Since my last post, I’ve been messing around a lot with crypto so I’ll cover the following topics I’ve learned in the past few months: choosing alts, flipping coins, measuring in Sats rather than USD, market manipulation by looking at depth charts, and stocks vs. crypto scene.
I’ll start off by saying that if you started early this year, you could put your money in literally any coin of your choice and you would have seen an easy 3–5x multiplier of your initial investment. Sounds great right? Of course, but I wanted to be even more greedy (along with many others). If you can time the market and move your investment between different coins as they “moon” why not get 3x multiple times throughout the year rather than just once? And more importantly, when Bitcoin is at a high, why not buy coins that are dipping — and when the reverse happens, convert back to Bitcoin and get a multiplier on the BTC gains. This is essential the reason why flipping is so lucrative — if you time it right, you can beat a market that is already growing at 10% every day. I will say anyone in the past few months probably feels like a genius (along with me lol), but literally almost every coin went up atleast 300% so we were all just riding the bull market to be honest so anyone that acts smart about making money probably just gambled randomly.
Anyone that has used BTC for transactions know it is insanely slow and the fees are really expensive. When trading in high volume, it is impossible to use so there are many other alts you can use that are better at speed, transaction cost, handling large volume. ERC20 tokens based on Ethereum have applications (questionable how useful they are). So my first coin I bought was XRP (Ripple) which can be used with banking institutions. Here’s a great resource on alts: laymancrypto.com to find out which ones are interesting to you. Read up on them. Many are scams; some of them have a business model that make no sense; and some have a weak team that won’t get anything done.
Here’s the BTC price chart for reference:
It had an amazing run from July, but really started picking up in September. On one weekend however, BTC and BCH or BCC (Bitcoin cash - a hard fork of BTC), changed dramatically. BTC crashed while BCC shot up. Then BTC shot up and BCC fell. I caught BTC on the dip, but if I flipped between coins I could have made so much more money. So what exactly is flipping?
Here’s where things get a bit more complicated. Holding onto BTC is boring. Watching it go through dips and recovering sucks. In order to buy alts, I use Binance and Bittrex which cover most of the major coins and are MUCH better than Kraken/Coinbase in terms of not crashing when there is high volume. I also recently opened up a CoinExchange account for investing in coins that just ICO’ed or are worth almost nothing to gamble some profits for fun. There’s also EtherDelta if you really want to get in on ICOs early but I don’t recommend it; people lose coins randomly and the site gets hacked or you can get injected with malware that steals your private keys.
Here’s two quick slides I made to summarize why you should flip.
This actually happens quite often and is not just some theoretical case scenario. So what is a good example of this? Let’s take a look just a few days ago where I caught a really nice flip. There was news Coinbase was adding BCH/USD, with its founders openly against BTC, and “operation dragonslayer” might take off. So I decided to move my money from BTC into BCH on Dec 16.
I didn’t really except it to happen so soon so I got lucky I didn’t have any lost opportunity cost with BCH just sitting around moving sideways. On the 18th, BCH takes a sharp rise up and doubles in two days. At the same time, BTC starts to decrease steadily. This was the best case scenario for me. Let’s say I had $500 in BCH. In two days, it becomes $1000. I except BCH to start to fall again. So I converted my BCH into BTC at this peak; giving me a lot more BTC than if I just bought BTC on the 16th with $500 and held it. So when BTC rises back up, I will get a nice multiplier in terms of getting a 2x on BCH and then an even greater multiplier when BTC recovers since now I essentially bought 2x as much BTC since I caught the BCH moon.
Of course, the other possibility is that BCH crashes while BTC goes up. Now you are screwed. But luckily this hasn’t happened to me yet out of sheer luck. However, by moving things around so often and letting FOMO take over, I missed some great chances. For example, I held Ripple Coin literally since the start. It was moving sideways for so long and having no action, so after it started going up a bit, I sold. The next day, it goes up 3x. Literally hours after I sell, I start seeing it going up and feel so sad. So that’s the cost; start moving coins around and you might lose an opportunity. I learned this lesson in a really hard way watching Ripple 3x while the coins I moved it into only 2x. That statement sounds ridiculous while typing it. But that was bull run in the last few months. Literally every coin moved so fast. When buying or selling trying to catch these flips, I highly suggest buying in chunks rather than putting all your money in at once. You won’t max out but you won’t get screwed completely or miss a chance to flip if your sell order was too high. I also suggest rationally thinking of how much you want to make and how fast and automating your orders so you don’t get emotions take over.
Cryptocurrency corrections (“crashes”): GET USED TO IT
Crypto is still fairly early. It is now mainstream and we get news of it everywhere. We get a huge surge in the market price from newcomers, and if you buy at an all time high (ATH) get ready to lose 50% of it if there is a correction. I personally don’t think we are near a crash or bubble yet. A correction sucks. But here’s a table that shows why HODLing is the right move.
I know many people will think: “but I can sell at the high; sell early; and rebuy when it dips”. I guarantee these people have not traded crypto. BTC falls 50–10% for no reason at times and recovers FAST. If after every 5% loss you start selling, you will end up rebuying at an ever higher price when it recovers. Also you should except a correction if the value goes up 10% everyday for months. So why did people not see the most recent crash coming?
First, people knew it was going to pop but the market was so enticing. Look just a few days before, BTC keeps dipping down but moves back. If you sold on the 9th, you would probably buy back on the 10th at a higher price. Same with the 14th. The problem on the most recent was was that while BTC was dropping, the alts were getting pumped insanely high. Here’s a look at the entire market value:
Even BTC was losing value, the market cap kept surging forward. Bulltraps are common, so it’s not worth selling most of the time. So while BTC stabilized at 17.5k, everyone was really happy with alts going up and the ratio between alts/BTC increasing. The weekend before, the shorts on wall street didn’t seem to affect the price; everyone was confident. The problem came when the depth chart at the time showed a large wall at 16k. I thought that the whales would crash BTC, scoop up the 16k sell wall, and move on. But… this time there was a huge support wall at 12k and that was their target. It was insane how fast they went after the wall. The problem was most exchanges like kraken and coinbase stopped working at the same time.
Tips moving ahead:
Market manipulation won’t go away. Learn to read volume charts, line charts, and most importantly depth charts.
Here’s the BTC depth chart now. You can see lines at 16k, 17k etc as expected. Those lines mean that there are a lot of sell orders at the point or “resistance” values. You probably shouldn’t except BTC to fly through there. Similarly, if there is a large line at 12k (there used to be 3 days ago!!), you would except a lot of “support” at this price and the value to not dip below 12k. When you see more green than red, BUY the coin. This is all I do for alts. I just look at the line graph, trading volume in relation to market cap, then the depth chart, and buy. I generally don’t care about coin application unless I believe in something completely. Here’ one with a large sell wall and low support:
And my favorite coin for memes (ChainLINK)
If you pick a good coin, and the support is large and good news pops out you cans the resistance wall get destroyed fast. This has happened with Ripple, IOTA, etc. Learn this before you invest in alts or you’ll probably lose both Sats and USD. That reminds me… start thinking of your value in terms of either ETH or BTC value. You want to maximize both of these, since keeping track of USD value will not help.
Here are some of the alts I owned or currently own:
ETH, BTC, BCH, XMR, XLM, DCR, ETC, LINK, ZEC, DASH, LISK, IOTA, XRP
Most of them have good applications. I decided to split my money into these rather than try to guess which one is going to moon. I want to buy SiaCoin soon before it takes off. I also bought most of my coins based on those available on Kraken with USD purchase. I figure normal people will dump more money into these coins since it is easier than chasing coins on random exchanges. Everyone once in a while, people spread rumors about the next big coin about to moon. Usually something stupid, but I end up buyin git anyways since I like the community. here are some examples of coins that have almost no value or application but you buy anyways in hopes you catch a pump and dump; I advice you NOT to do this. But I like the thrill.
BSD, WABI, LIFE, BSR, MUSIC. Some rumors come out true. MUSIC made me a good amount and moved fast as rumors promised. WABI does nothing. But it’s fun money and I don’t mind losing it.
Stocks vs Crypto Update.
There’s a bunch of stocks I bought recently that are more Blue Chip. Unlike crypto, I learned the hard way penny stocks can crash and never recover… ugh.
But I luckily purchased Snapchat on the dip and also recently bought my first IPO from Quanterix. Since I know pretty much everything about Quanterix since I work in a similar field for my PhD, it made sense for me to buy stock after keeping up to date with their newsletters, tech, and papers. I feel a bit more mature trading stocks than randomly throwing money into crypto. Stocks also feel more real since they have real news substance that impacts price. I’ve also began treating crypto money as a game. The community treats it the same way so it doesn’t really help. After talking to people, it’s weird when people keep telling me to “cash out” and realize my gains. I just want to keep multiplying it and see how far I can go… hopefully, I will cash out a large chunk by the next post before I lose it all. Was pretty scared today despite having all the orders locked in in case of an actual crash to 0, and wasn’t fun.
PS: I think the crypto community is more fun and involved. They also really believe in the ideology of some coins. I kind of became a believer of this and refused to sell when wall street was shorting and the dip happened. Some part of me wanted to resist wall street’s entry and not sell even if losing more. Plus the news is hilarious; you get very serious topics like Block Size/Tether Printing issues with names like “operation dragonslayer”. Makes it more fun than losing at EPS or trying to read boring earning calls. And I’ve been so spoiled that looking at 5y charts and seeing only a 100% gain on companies looks so boring to me. Kind of like someone in the stock market looking at bank interest.