Why I stayed away from BTC at $30K?
Cryptocurrency trading has rapidly gained popularity among investors seeking high returns and decentralized financial systems. However, the volatile nature of cryptocurrencies has made this type of trading risky, leading to significant losses for some traders. To mitigate these risks and develop a successful trading strategy, investors can turn to tools such as the Crypto Risk Index. This index provides a comprehensive assessment of risk associated with cryptocurrencies, enabling traders to make informed decisions and manage their investments effectively.
In this story, I will explain to you why I stayed away from buying BTC (or other crypto) when BTC reached $30k.
I have written multiple stories on how I have been leveraging the Crypto Risk Index (provided by https://cryptomarketbuzz.com/ and updated hourly) to inform my crypto trading strategy. You can read my story on how I made 160% net profit with only 5 trades over one year, only using the Crypto Risk Index.
What I have learned is that when the Risk Index is high, there is a high liklihood of price correction. Two years ago, I got caught into the hype (or FOMO) and bought BTC at $60K, just because everyone around me was buying BTC. I didn’t have a strategy, I was just hoping that price would continue going up so I could sell at a profit. But short after that, the price dropped, and I am still HODLing hoping at some point I can at least get my money back.
But I learned an important lesson, that I should have a strategy for entring, and exiting trades, and I need to consider the risk level at each point (entering trade, exiting trade or holding). That’s when I came across the Crypto Risk Index, and I have been following the index ever since.
So why didn’t I buy BTC at $30k last week?
The answer is very simple! Because the risk index for BTC was around 95 (out of 100!), which is Extreme Risk, and the highest the index has been over the past year. What does that tell you? High probability of price correction (or extreme probability). And that’s what we have seen since then, with BTC currently trading at $29,603 (as of April 17, 2023). Had I bought BTC at $30K+ (when the risk was 95/100) I would have lost money by now and was stuck in the trade. See the image below.
Will BTC price continue to fall?
No one can predict the future, so the price can go either way. But what I have learned over the past year following the Risk Index is that I do not enter trades (buy) when the Risk Index is above Medium. And that’s my preference and strategy. You can review the Risk Index and price trends and develop your own strategy based on your risk tolerance.
There is no Guarantee for Future Performance!
I should note that I am not a financial advisor, and this blog is NOT to advise buy, hold, sell, or do any crypto trading. It’s entirely up to you and you should do your own research. I am only sharing my experience using the Crypto Risk Index. Also, previous performance and price actions do not guarantee future performance, and you should be aware of the risks associated with crypto trading.
Have fun! Make some money! Enjoy it!
Final thoughts …
Crypto investing can be highly lucrative, but it also comes with a number of risks. Without a proper risk management strategy in place, investors can suffer significant losses when the markets go against them. As always, my advice is to manage your risks, understand the crypto markets, read the news, understand the assets you are investing in, and have proper exit or HODL strategy before entering any investments.
Keep in mind, the information provided on this blog is for informational purposes only, and does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the blog’s content as such. You need to do your own research and understand the underlying volatility and legal and political aspects of cryptocurrency markets. Also, you need to consult your legal, financial and tax advisors before investing in cryptocurrencies. There are risks in cryptocurrency investments. Do your own research and invest wisely.
