BTC - Buy The Rumor, Sell The News

Red candles across the board with crypto these last few days. I want to break down for you what is going on so that in the future you can spot these situations and you can hold the line and keep your diamond hand status.

Main takeaways from this article:

  1. Buy the rumor, sell the news.
  2. Whales have patterns they follow.
  3. Don’t over leverage a position you can’t cover.
  4. Stock market FUD creates crypto FUD.
  5. Learn how to diamond hand

Buy the rumor, sell the news. 

First thing to notice is that the levels of BTC on the crypto exchanges is very low. This means there isn’t as much liquidity as we normally see. Liquidity means how much BTC is being bought and sold in a day. Here is a picture of what to look at when you’re trying to measure liquidity.

What low liquidity does is make it easier for the price of BTC ( or really any tradable stock ) is a lot easier to move. In the last few days, we have seen a lot of Bitcoin whales take their profits and also a lot of people moving their holdings to cold storage.

This explains the low liquidity. To compound the problem, on September 7th, El Salvador finally introduced their bitcoin as legal tender. This is a lesson we all need to be aware of in the crypto world is that big whales buy the rumor sell the news.

doge coin

This happens very often in crypto. One easy to remember instance of this happening is when Elon Musk went on Saturday Night Live. There was a huge sell off as the show was happening because the crypto world was all keeping their eye on this show. They knew he’d talk about Dogecoin. Elon didn’t disappoint and talked about the Doge.

Investing whale behavior

As many fans watched with anticipation the big whales sold their positions and left the retail crytpo traders scratching their heads. Well not all of them. Many people are starting to understand that the whales manipulate the markets and get out and take their profits.

The good thing to realize is that there is a pattern here, right? Learn your lesson if you haven’t with this strategy. You can either earn a lot of money or you can avoid the heart break of buying at the top. So, when big news is released on your favorite coin be aware of what is likely going to happen on that date.

Many Cardano holders are looking forward to the release of smart contracts on September 12th. Be aware of what is likely going to happen when the NEWS releases. Buy the rumor, sell the news. Nice thing about ADA holders is that 70% of people invested into Cardano have their ADA staked and likely won’t pull too much out to take profits.

The whales will. The price of ADA will drop, so expect it! As for me I’m going to hold as I don’t like to play the market. I know that in the years to come the price of ADA will be much higher than it currently is. I will sleep well that night in full knowledge that the price will likely drop but I’m OK with that.

Don't over leverage yourself

This takes me to my next point that being a leveraged trader right now may have put you in a rough place. If you aren’t a leveraged trader, good! I’m a huge fan of handling finances smart and investing with your own money. Leveraged traders have been caught out by this massive drop and their positions have been liquidated.

When liquidations start happening, the price of BTC drops even further. This is very unfortunate as it creates for a flash crash of the crypto markets. As a result, there are more liquidations for people to cover their positions with leveraged BTC that they may not be able to cover. It’s a vicious cycle.

You may have seen the opposite of this situation happening with GameStop. Many hedge funds over shorted GME and people caught. People started buying GME like crazy and the hedge funds had to cover their positions which forced the price to skyrocket, which caused the hedge funds to cover their positions which made the stock price soar. I don’t mean to go on tangents here, but I’m trying to get across patterns and behaviors of stock and crypto prices. This will help you be a more aware trader and have more success while investing.

Stock market FUD is Crypto FUD

Speaking of the stock market, that has a big effect on crypto-currency prices as well. When the stock market has a tough time, generally so does crypto. There is also concern around Fed policy and post pandemic growth of crypto.

Investors have been on edge thinking about when this wild bull run is going to end. We all are in a speculative game here and we obviously hope for the best, but the truth is nobody knows what will happen with crypto prices in the future. When people tell you this crypto is going to 2x or 50x take it with a grain of salt and do your due diligence.

Diamond Hands

Main thing to learn is if you're a long term holder of any investment, understanding market behaviors will help you hold on to your investments and not sell when things get dicey. So hopefully you learned something that will take you to the next level of your investing journey.

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The main takeaways from this blog:

  1. Buy the rumor, sell the news.
  2. Whales have patterns they follow.
  3. Don’t over leverage a position you can’t cover.
  4. Stock market FUD creates crypto FUD.
  5. learn how to diamond hand.

Thanks again for reading. Let me know in the comments what you think!

 

 

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