CRYPTOCURRENCY
Pre-halving Dip Or the Threat of the Looming War?
We had the biggest dip in the bull market. How did you do? Did you get burned or liquidated?
We talked about the “pre-halving” dip in Bitcoin’s price. Billions have been liquidated. Reasons always vary, and “experts” inevitably seek possible explanations for them, but the simple fact remains — history has indeed rhymed.
Regardless, Bitcoin dropped about 20%, and alts got slaughtered. I don’t know if this is “the dip” or if we are in for a prolonged phase of lower prices. Again, I don’t see the future.
All of these experts, with their opinions, are worth nothing in my mind. The price went down because people got scared and panicked. There were more sellers than buyers in the market. Reasons are arbitrary for the most part.
I was long to my neck and beyond before the dump
Should I have seen it coming? Maybe, but the charts were bullish, so I went with that. Did I expect a pre-halving dump? Yes, but I treated each moment in the market as unique. Everything looked like we would get at least one more push upward in prices. So I was long. Alas, we did not.
Consequences
Since I’m a leveraged trader, I’m glad I followed my one risk management rule on this dump, or I would have been in serious trouble. I neglected almost all of my other rules, being an emotional dickhead, that I know myself to be. This is the rule, and here is the link to the article explaining it:
Only keep up to 10% of your whole trading/investing portfolio on the leveraged trading account.
How did that play out on this surprise dump?
I got liquidated!
So, not great. I’m not proud of it. It shouldn’t have happened. I got careless. I let myself loose and gave my trades more room to breathe by removing the tight stops. For a while there, it was free money. Naturally, I paid the price.
Only this time, I was prepared
At this point, my whole trading account was only about 7% of my portfolio. All profits went into spot accounts — into relative safety. That was the amount I was comfortable losing in the event of a sudden market-wide panic.
No risk, no profit, unfortunately.
It’s not fun, don’t get me wrong; I should know better by now, but I am human and prone to being an idiot. I’ll be okay, though. After I stop being pissed off at myself for naked leveraged trading like a proper moron.
Know thyself
I keep saying how important it is to know your weaknesses and protect yourself from yourself. This dump and liquidation were prime examples of this.
- Do you know your weaknesses and most often prevalent mistakes?
- Are you working around them?
- Are you always protected from your worst self?
Shake it, baby
I’m trying really hard not to get shaken out of positions by being overly careful and wanting to buy lower, as that has been my “Achilles heel” throughout previous bull markets.
I lost the chance to make serious cash by trying to save pennies.
I still believe we’re going to see much higher prices in the near future. I also allow for a serious dip down into the 50,000s on Bitcoin, which would be horrible for alts.
By trying to sell now and buy lower, I would risk losing my positions and being left with empty hands all over again, as I have been for most of the uptrend because I just didn’t get any positions, as there were zero meaningful dips.
The risk to the downside is what — 50%? But the risk to the upside is multiples. The logic says to keep my positions, so that’s the plan.
I would love to buy this dip and potentially lower prices, but I have no external income, and no free FIAT left. Such is the state of affairs. The boys with big pockets get to enjoy lower prices, and we, the small fish, have to survive for the time being. It is what it is.
If you’re lucky enough to have some spare cash, I would start deploying it slowly. Okay, the truth is I would have been all in on this dump already, hehe. All my targeted prices for my favorite alts spot bags have been hit. Only Bitcoin has yet to reach the targeted 30% bull market correction.
To summarize my mistakes and weaknesses for this example:
- I sell too soon and keep waiting for lower prices. That often leads to being left empty-handed in bull markets. I hate buying high for precisely this kind of incident when I’m buying the top, and I have to endure weeks or months of being underwater or large drawdowns.
- I get greedy, frustrated, and careless in my day trading, and I sometimes “forget” to use stop losses when volatility increases. That has often led me to quick profits initially but painful losses in the end.
This time, I’m trying to combat these flaws of mine by:
- Separating spot investing and leveraged trading accounts.
- Only keeping a small percentage of my portfolio exposed to leverage.
- Deciding to hold a few select assets through the bull market and trying to add to them with profits from leveraged trading.
- Being primarily denominated in crypto, not dollars or euros.
- Taking more risk to the upside by holding assets longer and limiting downside risk on leveraged exposure.
We’ll see how that goes.
The future looks murky and full of dangers
For now, while we all see the danger in the air, whether from the cooling off of legacy markets or the threat of war, the trajectory is still up for our little corner of the market. Zoom out if you fail to see it.
- Could this dump suddenly reverse and continue “up only?” Sure.
- Could we be in for a deeper correction still? I’m afraid so.
Newer market participants hate this sort of analysis and want a clear, directional answer. The problem is — no one can see the future. We have to make the best-educated guesses we can at any point in time. Those who guessed right are celebrated, and those who didn’t get spit on. I sure am glad I’m no “influencer.”
How does one best survive such periods of uncertainty?
There is a position called “happy either way.” It means that you’re positioned in a way that you are happy if:
- The market goes up from here, as you have some assets and will be making money. You might even add to winners later on.
- The market goes down as you get to buy more assets you want at cheaper prices.
This only works in bull markets, mind you. I still believe we’re in one, and so adding to the spot position lower would be a great way to make money later on when we breach the all-time highs again — assuming we do, of course, which I am at the moment.
The market has been confused and has been sending mixed signals
I suspect this behavior might continue for some time, so leveraged trading might get tricky here. I would advise caution loading up too soon (on leverage) as the markets are very unstable.
I’m waiting for more clarity myself. Again, this goes for leveraged trading, not spot. If you’re not buying your favorite altcoins at these roughly 50% discounts in a bull market, then I don’t know what you’re waiting for. Bitcoin maxis should probably be buying 20% dips even if we do get to see a 30% one in the coming weeks.
In my experience, trying to time the exact bottom is a fool’s errand. It sounds great and carries the power of almighty clout on social media, but most of the time, it leaves you empty-handed. I speak from experience, unfortunately.
Remember — survive in order to thrive!
Good luck out there.
