While the current market is terrifying and things are likely to get worse, that doesn’t mean investors should sit on the sidelines. In fact, history has proven that he was one of the best times to buy bitcoin (Bitcoin) is when no one is talking about Bitcoin.
Remember the crypto winter of 2018-2020? Few people, including the mainstream media, were talking about crypto in a positive or negative way. It was a period of prolonged downtrends and long flats that prudent investors were stocking up for the next bullish trend.
Of course, no one knew “when” this parabolic advancement would happen, but this example is purely meant to show that cryptocurrencies could be in the crab market, There are still good strategies for investing in Bitcoin.
Let’s look at three.
Savings by dollar cost averaging
When it comes to investing in long-term assets, it helps to be price agnostic. A price-agnostic investor will continue to identify and add to their positions a few assets they trust that are immune to value fluctuations. If your project has good fundamentals, strong and active use cases and a healthy network, it makes more sense to adopt Dollar Cost Average (DCA).
For example, look at this chart for DCA.BTC.
An investor who auto-buyed $50 BTC every week for two years is still profitable today, DCA eliminates the need to trade, look at charts, and be exposed to the emotional stress that comes with trading. increase.
Trade the trend and go long from extreme lows
Aside from stable and moderately sized dollar-cost averaging, investors should build a dry powder arsenal and just sit back and wait for intergenerational buying opportunities. Significantly oversold and entering the market when all indicators are extreme is usually a good place to open a spot long, but is less than 20% of his powder dry.
When asset and price indicators are more than two standard deviations apart, it’s time to look around. Some traders zoom out to 3-day or 1-week timeframes to see when an asset corrects to higher timeframe support levels or previous highs as an investment signal.
Some are looking for prices to bring the major moving averages such as 118 DMA, 200 WMA and 200 DMA back to support. On-chain fanatics typically follow the Puell Multiple, MVRV Score, Bitcoin Pi indicator, or Realized Price indicator to see when extreme multi-year lows are reached. buy sign.
In any case, entering a spot long during extreme selling is usually a good swing trade or even an entry point for a multi-year position.
do nothing until the trend changes
Trading in a bear market is difficult and capital and portfolio preservation are paramount. For this reason, it is best for some investors to wait until a trend change is confirmed. As the saying goes, “trend is your friend”. Everyone is a genius and a good trader during a bull market, so if that was you, wait for the next bull trend to roll and be a lucky genius.
Downtrends, consolidations and bear markets are notorious for slicing traders and reducing portfolio sizes. So unless you have his PNL positive method and short skill to trade during bear trends, it is not wise to trade against the trend.
The key for crypto investors is to stay in the vacuum and keep an eye on the stock market. Crypto traders tend to focus only on the crypto market, which is incorrect. Because the stock market and BTC and Ether (ethereum) prices show a strong correlation over the last two years. In your chart suite of choice, it is wise to keep the S&P 500, Dow Jones or Nasdaq charts alongside BTC or ETH daily charts.
In the recent trend reversal, BTC’s price action has been a canary in a coal mine, and has started to crow louder and louder as the US Federal Reserve (Fed) ramps up its rate hike intentions. Easily misled by the slight movements that occur on his 4-hour and daily price charts of Bitcoin, easily tempted into some big positions based on the belief that BTC is on the brink of a reversal. may occur.
By looking at the market structure and price movements of the largest stock indices, we gain important insight into the strength and duration of any bullish or bearish trend that Bitcoin may exhibit.
This newsletter is humble pope Author of Cointelegraph Substack and Resident Newsletter. Every Friday, Big Smokey writes market insights, trend how-tos, analysis, and early research on potential emerging trends within the crypto market.
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