2018 has been quite a volatile year for cryptocurrency markets. So far, there have been one major flash crash and several bear markets. Despite this, several traders are still in the green year to date. Here are a few tips I have learnt from trading so far.
- Go big
One of the biggest mistakes I have made while trading cryptocurrencies is not going big. If you are sure about how much a coin should be worth, then bet big on it. “Big” varies according to one’s budget. For me, a big position would be holding 10,000 to 1 million coins. If you cannot afford that, then the minimum one should hold in a trading position should be 1000 coins.
- Cut your losses quickly
There is absolutely no need for holding on to a loss making position. If a coin has not performed to your expectation, then sell down. Do not develop emotional attachments to any coin. You will make losses in trading. It’s like falling off a bicycle, or the car veering off when learning how to drive. Take your loss and move on.
The most important thing is to know why you were wrong, and learn from it. Did you buy a coin at an all-time high or low? Did you buy a coin with absolutely no fundamentals?
- Do not be greedy with gains
While 100% is child’s play in the world of cryptocurrencies, you do not have to ride a coin all the way. A 30 or 40% profit could turn to a negative position in a matter of seconds. That loss position could last for a few minutes or 3 months.
The number one objective in trading is to make a significant return on your initial capital.
- Stick to what works for you
Some traders play over 20 coins in a day. Others stick to 3 or 4. Some traders wait for a 30% or 40% profit before exiting a position. Others are content with just 5%, then shutting down for the day.
Stick to what works for you. They all add up. 5% profit every day gives 150% return in a month. 30% profit 5 times in a month gives the same profit margin.
- Convert your profit to fiat
While it is nice to brag about how many bitcoins you have, or how you made 1000% profit on a coin, it all comes to nought if you do not have physical cash. Profits can evaporate over night. Convert some of your profits to fiat, regular currency, or bitcoin as its wallets rarely go on maintenance breaks.
- Do not use just one exchange
The saying that one should not put all eggs in one basket applies when trading. Don’t have all your coins in one exchange. When a coin experiences rapid price appreciation, some exchanges may decide to go on break or maintenance to prevent market manipulation. Others might do this because they cannot handle the volume. This is another reason why you should cash in your profits for bitcoin or fiat.
- There are no breaks
There are no breaks in crypto markets. No 2.30pm shut down like the Nigerian Stock Exchange and no public holidays. Trading is a full-time thing. News around coins plays a major part in price swings. Flash crashes occur – sometimes in one exchange, or across many exchanges. Always keep your ears down for the news. If you can’t do that, buy a few solid coins, set alerts on your phone and cash out when they get hit.
- Do not listen to the crowd
If everyone is excited about a coin, that should be when to sell. The buzz around a coin means price increases have already been factored, and there’s little room left for upside. The coin could also be shilled or hyped because a whale (someone with a large amount of coins) wants to exit.
- Buffetarian rules apply
Warren Buffett may be bearish on cryptocurrencies, but his rules apply. Be greedy when everyone is fearful and fearful when everyone is greedy. Bear markets are the best time to buy coins. When everything looks green on cmc, take a break from the market. Sell down coins you have made a profit on.
- Keep your coins safe
If you are a big time player, you most likely would be a target for hacking, when an exchange is hacked or compromised by malware. Enable 2 Factor Authentication on your device. Get a separate phone and laptop for trading cryptocurrencies. Keep your coins offline in a hard wallet.
There are 365 days in a year. If you get things right, you only need to be right a few times in a year.
Unknown entity transfers $166 million worth of Bitcoins
BTC whale moved 15,987 BTC in block 649,777 estimated to be worth about $ 166 million.
The number of transactions done by large entities in the world’s most important crypto market is on the rise.
Data obtained from Bitcoin Block Bot, a crypto analytic tracker, revealed that a BTC whale moved 15,987 BTC in block 649,777, estimated to be worth about $166 million, recently.
Whale alert! 🐋 Someone moved 15,987 BTC ($166M) in block 649,777 https://t.co/VAta1uVOcH
— Bitcoin Block Bot (@BtcBlockBot) September 24, 2020
BTC whales have been moving large stacks of BTCs lately, triggered by the third BTC halving that occurred some months ago.
Much of the recent increase can be attributed to wealthy entities withdrawing their BTCs from crypto exchanges. Apparently, this is not new wealth; rather, it represents a change in the way Bitcoin whales are choosing to hold their coins.
From a macro level, the increase in the number of these large entities can be considered bullish.
At the time this report was drafted, Bitcoin was still trading around the $10,500 support levels, as investors have kept buying BTC at its support levels.
Explore the Nairametrics Research Website for Economic and Financial Data
Quick fact: At the BTC market, investors or traders who own large amounts of bitcoins are typically known as Bitcoin whales. This means that a BTC whale would be an individual or business entity (with a single Bitcoin address) owning around 1000 Bitcoins or more.
As BTC whales accumulate BTCs, Bitcoin’s circulating supply reduces, and this can weaken any bearish trend bitcoin finds itself in.
Meaning that over time, it’s possible that as BTC approaches its fixed supply of 21 million, the price of BTC will go up, with BTC’s present demand factored in.
Ethereum’s investors gain 9% in 1 day
Ether traded at $348.85 with a daily trading volume of $12,728,832,627.
The second most valuable crypto is on a strong bullish run, just a few days after dropping momentarily, as the U.S dollar hit a rebound and COVID-19 cases rise.
What we know: At the time this report was drafted, Ether traded at $348.85 with a daily trading volume of $12,728,832,627. ETH price is up 9.1% in the last 24 hours. It has a circulating supply of 110 million coins and a max supply of ∞ coins.
Taking a look at its price action, Ether is sitting in an interesting price range, where the most polarization has historically unfolded (between the $200 and $300 levels) during its five-year history. A close above $350 in the near future would likely trigger more upsides.
Quick fact: Ethereum is a global, open-source platform for decentralized applications. In other words, the vision is to create a world computer from which anyone can build applications in a decentralized manner, while all states and data are distributed and publicly accessible.
On Ethereum, all transactions and smart contract executions require a small fee to be paid, which is called Gas. In technical terms, Gas refers to the unit of measure on the amount of computational effort required to execute an operation or a smart contract.
The Ethereum network is presently close to reaching its technical limits, as DeFi and Tether are essentially responsible for as many transactions as the network can handle at the moment.
European Commission set to regulate Cryptos
The European Commission hopes to develop a framework that will support the digitization of assets through tokenization.
The European Commission has designed a new Digital Finance framework including Digital Finance and Retail Payments Strategies, and legislative proposals on crypto-assets and digital resilience.
This was disclosed in a statement issued by the Commission on Thursday.
What it means; The European Commission is paying special attention to developing a regulatory framework that will support the digitization of assets through tokenization and also smart contracts.
Why is it happening now? It plans to give investors, consumers, traders choice and opportunities in modern payments and financial services while at the same time ensuring consumer protection and financial stability.
Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People, said: “The future of finance is digital. We saw during the lockdown how people were able to get access to financial services thanks to digital technologies such as online banking and fintech solutions. Technology has much more to offer consumers and businesses and we should embrace the digital transformation proactively while mitigating any potential risks.”
What the European Commission plans to regulate include;
- Crypto-assets qualifying as “financial instruments” under the Markets in Financial Instruments Directive (e.g.: tokenized equities or tokenized bonds) have already in the past been subject to EU securities markets legislation.
- Crypto-assets that do not qualify as “financial instruments” such as utility tokens or payment tokens, the Commission on 24 September proposed a specific new framework that would replace all other EU rules and national rules currently governing the issuance, trading, and storing of such crypto-assets.
- This Markets in Crypto-Assets Regulation – MiCA – will support innovation while protecting consumers and the integrity of crypto-currency exchanges (no insider trading, front running, etc).
- The proposed regulation covers not only entities issuing crypto-assets but also firms providing services around these crypto-assets such as and firms operating digital wallets, as well as cryptocurrency exchanges.
Recall Nairametrics a week ago broke the news on Nigeria’s Securities and Exchange Commission (SEC), proposing a new set of rules that will regulate Crypto-token or Crypto-coin investments when the character of the investments qualifies as securities transactions.