This is a brief article culminating what we have written about for most of the year. The market is down, but we believe these are the opportunities that bring about amazing gains for the patient investor.
Watching your portfolio drop 30-50% in one or two days can be disheartening. We have experienced this phenomenon at least three times this year. We view these dips as tremendous opportunities to reduce cost basis (average price of an investment) and truly practice what we preach. It goes without saying that any one of these dips are possibly bringing us into the next market downturn. I am not a professional trader, nor do I want to be. I prefer to use on chain metrics and analysis, market trends, news, and investor psychology to make my decisions. With this in mind, I will only start to worry when the old BTC wallets start to sell, as we saw in 2017 and the previous bull markets.
We can look at on chain metrics and see if these old wallets are moving funds, and even the people who bought at 20k are not selling for the most part. This [article] shows that many buyers around 20k have not sold and are HODLing for bigger gains in the future. The other metric I am using to decide whether to be worried or not is the relative strength index. Usually when a market is overheated this number approaches 75 then 80-95, this shows that the strength of buyers heavily outweighs the strength of sellers. This metric also can assist in buying when a market is oversold and cooling off (below 35), I use it for all of my purchases. The key to investing in crypto is to take emotion out of the picture. Make a strategy, educate yourself, and take control of your potential financial freedom. Below we once again show the number of growing addresses with >1 BTC. Mass adoption is coming, this is just a hurdle along the way.
Opportunity
We wrote a media article during the last big flash crash and the essence of the writing was “with great dips come great opportunities”. We believe now is a great time for the new crypto investor to start that dollar-cost-averaging that we speak about on repeat. This is also a great opportunity for those who have grown a portfolio to reduce cost basis or buy into a crypto in their watch list that is down 20+%. One method I discuss with newer investors is to create a watch list of 5 crypto assets over 1-billion-dollar market cap.
Each week allocate a certain amount of cash to your preferred exchange, so the money is ready and available. Then take this money and buy into the token that is the most red, down, and beaten. This is the type of decisive investing that brings you the safer wins. Investing into tokens that are under 100 million dollar market cap should only be done after you have established your portfolio, or if you are just here for fun and ready to ride the massive risk. Once you have grown your portfolio say from 500$ to a hypothetical 3-4k you can then allocate small percentages to small or micro cap tokens. This is not financial advice but I try to repeat this as often as possible because I have been burned many a time allocating too much capital to a single risky bet.
Conclusion
The market we are seeing today is a combination of calculated fear uncertainty and doubt. Also the options market is expiring in a few days, we tend to see immense volatility around these times. We again refer to our old BTC wallets, and RSI (relative strength index) we like to keep it simple and sweet. The market was slightly over-heated and we did expect a correction around these times. We alluded to this fact during our last media article stating how we felt unsure about the tremendous and immediate upswing of Bitcoin price action. Remember, these corrections are needed for healthy market movements. If we continuously go straight up the sell pressure for earlier buyers becomes too high and they feel pressured to sell the asset. This is why SHIBA pumps up and down so fast, why wouldn’t someone who put in 500$ sell when their investment is worth 4500$ four days later? As always stay safe out there, we hope you use our writings to assist in your OWN research, and thank you for reading!
