If history has taught us anything it’s that millionaires are made during the worst of times. Crashes provide opportunity. Assets are undervalued and people with money are able to benefit. We’ve seen it across all asset classes: property, commodities, equities and FX.
With some careful research, a sound buying strategy and being able to master your emotions, we can turn current market conditions into the biggest buying opportunity in years.
If you’re a long-time crypto investor, chances are your portfolio is at least 50% off the top. If you are recently into crypto you are probably underwater. So, what now?
- Good buy or goodbye?
- Why has it fallen so far?
- What’s the best approach now?
Ran has a great take on it. Question is, is he right?
There have been numerous times in Bitcoin’s short life span where a significant correction has been followed by a period of consolidation. We all know what happens next.
Source: Trading View
Why the carnage?
Before we look at a strategy for navigating this challenging market, it’s important to understand how we got here. In October and November last year the markets were euphoric. Bitcoin was making new highs and altcoins were following. Investors were basically throwing darts blindfolded and hitting the bullseye.
Since those all-time highs, a series of macroeconomic factors have conspired to shift sentiment lower and trigger a period of increased volatility.
What went wrong? It started as a healthy correction. All sustainable bull runs need that, right? BTC dominance started to fall and break supports. Still no cause for concern. After all, now it means we’ll get an altcoin season.
Source: Trading View
The sell pressure cascaded via liquidations and a sentiment shift was indeed underway. The market identified a number of factors that contributed to the wave of selling pressure. . Escalating tensions between Russia and Ukraine. Markets don’t like uncertainty.
Add to that unfavorable macro data – higher inflation triggered by CPI data earlier this month has led the Fed towards a potential string of rate hikes.
Then came the inverse correlation between BTC and the 10-Year Treasury yield. Crypto markets looked for a decoupling.
Stock markets sold off in such an aggressive way that there was a continuation into the crypto market. Both asset classes were deemed to be risk assets and as such were treated the same way by the investment community.
Fact is, the inflation data and high 10-year yields all pointed to a risk-off strategy. That means the market wants to sell equities, sell crypto, and keep their money safe.
So what can we learn? Ran was 100% right with his tweet. You need to work hard to earn your profitable investments. Anyone can make money when everything goes up. The trick is to understand why you’ve made money. Have you been lucky, or have you carried out sound research and followed a plan?
What does Ran always say? Invest in protocols that will change the world and give them enough time to do it.
Patience is key
So what’s the strategy?
If you liked something at $100, you have to love it at $40. Correct? It’s only sentiment and fear that says otherwise.
A terrible strategy would be to buy at $100 and sell at $40. That’s what has been happening and we definitely want to avoid that! Right now, your losses are “on paper” – they only become “real” when you lock them in by selling at $40.
We’ve heard it time and time again. “Be greedy when others are fearful, and fearful when others are greedy.” History has proven this to be true wisdom.
The only selling we want to be doing is switching from underperforming projects into the projects that will survive a bear market, and be the first to recover. We know the process of recovery starts with BTC, moves to top altcoins, then filters down to lower cap projects, but for now we suggest you focus on high liquidity, strong Altcoins with zero speculation.
This has been evident during small pockets of market strength among the red. With every small bounce in BTC, projects such as LUNA and Fantom have shown relative strength. They have been quick to recover and this is perhaps a sign that when a more sustained rally is in place, they will be the first to outperform.
Although we cannot predict the bottom (nobody can), we want to suggest a shift to quality. Even the poor performers will have a relief rally. That would be the time to switch out into the projects that will change the world.
All in or wait?
A popular and prudent strategy would be to dollar cost average (DCA).
This would benefit you in two ways. It provides exposure to the projects you want at intervals of falling prices, and it helps you to keep money available on the sidelines for any capitulations or upside confirmations.
No doubt trading times are difficult at the moment, and watching every price tick will cause more harm than good.
Stop staring incessantly at your screen or phone.
Trust the strategy.
Do not sell, stay in the market, invest in trusted projects and then go for a calming walk. Patience is the key. When the recovery comes, it will be these moves that traders and investors will look back on.
Quote by: Fabienne Fredrickson.
Crashes are always exaggerated. Market forces make it so. Many people trade the markets via leveraged derivative products, and when they start getting margin calls, they have to sell assets to maintain their positions or face forced liquidation.
In times of desperate selling, the only assets that are sellable are liquid assets, and assets that are in profit. These are usually the quality projects.
This may be why we have seen over-extended sell-offs in high quality names. Let’s not forget, although they may be 50-70% off highs, they are still 500% up over the last six months, in many cases.
Banter wisdom
During challenging times, making calm investment decisions is more crucial than ever. Get it wrong and you are out of the markets for good. Get it right and you could change your life forever. No-one said it would be easy but with extensive research and a sound strategy you could be making decisions now that make you a millionaire when the market recovers.
