Read it first: ESSENTIAL Insights
Wondering what the Essential insights newsletter is all about? Read this sample below. We send out insights about once a week (sometimes a little more if there’s a lot happening in the market).
This newsletter you’re about to read is only $3/mo.
That’s right, for less than the price of a drip-coffee you can sign-up for it below and get complete access to regular insights like this – and take advantage of the cryptocurrency market.
Here’s an actual example of a newsletter that was sent out – it’s packed with insight:
It was the largest Bitcoin (BTC) and Ethereum (ETH) selloff ever. Yes ever. It represented a 15% drop in BTC, and over 55% drop in ETH on one exchange. Yes, ladies and gents, you’re now in the crypto world – and you should expect and prepare for this to happen more as we move forward in the space.
These times represent opportunities, and also massive danger zones should you decide to play the market unwisely (we’ll get into this more later).
MASSIVE PULLBACK, LESSONS LEARNED, NFTS, AND MORE
- MASSIVE BTC AND ETH PULLBACK – Why? No one knows, but we can speculate a few things happened.
1) people noticed there was some psychological resistance around the $60k range and decided to take some profits. This created a bit of a selloff. Selloff led to drop in price. 2) A drop in price led to leveraged positions (unfortunately yours truly) getting liquidated (sold) when short positions were hit. This led to more selloff. And the dominoes fell.Result? BTC down 15% and ETH down (on some exchanges) 55% in less than an hour.
- LESSONS LEARNED FROM LOSS – Leverage is one hellofadrug. If you’re playing with anything over 3x statistically you’re likely to lose everything. A 30% drop at 3x leverage = 90% loss. At 4x that’s 120% loss. You really want to understand the market signals ← get a mentor, study, do the hard work. It’s easy to get caught up in hype or fear – you’ll have to be strong to make your own assessments. Know the fundamentals. Even when you know the fundamentals, bad shit can still happen. It’s the market. There’s infinite money in the market, and it is not always rational. You’ll win some and lose some, just don’t expose yourself so much that you lose too much. Systems beat psychology every time. Follow the system!
- DEFI TAKES A BEATING – Naturally when BTC and ETH drop so too does the Alt-Coin market. DeFi took 15-30% drops across the board. This doesn’t mean that the projects aren’t good, it simply means that people got spooked. There’s an old trading saying that comes to mind here “buy when there’s blood in the streets”. If you’re into DeFi, I think we still have a lot of upside here as well.
- NFTS ARE CRUSHING IT – NFTs (Non-Fungible Tokens) are absolutely dominating the space of short term speculation. We’ll get into it later, but think unique “digital art or collectables” that cannot be duplicated. This world is taking off, and there are people who are making really healthy profits.
- SQUARE BUYS $170-MILLION – Yes, Jack Dorsey’s Square (same person who runs Twitter) just bought $170-million worth of Bitcoin this week, further solidifying the corporate “toe dip” into the waters of cryptocurrency. I suspect that after a few more “shakeouts” we’ll see more companies doing the same.
FOOD FOR THOUGHT
MASSIVE BTC & ETH SELLOFF
IF YOU BOUGHT BTC AT $200 WHAT WOULD YOU DO?
There are so many things to talk about here, this newsletter would be 10pages if I jumped into it all. So let’s cover some of the highlights.
We’ve got to remember that while you might be new to the crypto world, there are people who’ve been in it for years. Some almost a decade. While we’re getting comfortable with $30-$60k price points…these people got in the market when BTC was below $1000. Some when it was below $100 or even $50.
What would you do if you saw BTC hit $58,000?
You’d likely take some profits, and would be smart to do so.
And if you had a lot of Bitcoin (which I know we all wish we did), you might sell a few hundred of them to make the x-million that would change your life.
But there are two things to consider about all of this:
The crypto-markets (BTC is just $1-trillion) are still really really smallcompared to things like Gold (estimated $8-10-trillion) and the NYSE (estimated $25-trillion). So a selloff of $50-100-million can spook or move the market. Just look at what happened when Tesla bought $1.5bn of Bitcoin. The price jumped 10% in an hour, and continued upwards for more than a 20% gain in a single day! The same thing happens the other way.
The crypto-markets have gotten more complex with things like margin trading, futures, etc. ← which means people can now play with leverage. People can borrow more than they have. This means they can lose money quickly, which floods the market with additional crypto, further plummeting the price.
The two points listed above can, in many cases, cause a domino effect of selloffs if certain thresholds are hit.
Thus, if an old BTC holder sells off, let’s say 1,000 BTC for a x-millions, that might spook others to sell and might cause a dip on a couple of exchanges. This dip could trigger stop-losses (points at which people set an automatic “sell” so they can ‘stop any more loss’ in their position). This naturally means their cryptocurrency is sold, further pushing the price down and triggering both 1) more fear, and 2) more stop losses.
This is likely what we saw on Monday morning.
And when it happens, it happens very quickly. It took less than an hour for things to tank. Here’s what it looked like:
- Make sure you’re not exposing yourself to too much risk at one point in time. The crypto world is like the Wild West and it can move very very quickly.
- Really understand market signals. If you don’t, you’re basically gambling (which is fine if you want that rush), but it means you’re much more likely to lose since you don’t truly understand what’s happening or likely to happen.
- Always take some profits.
- Leverage is not used as a way to get rich quickly (or so they say. I’m still grappling with this one). Instead think of it as a way to solidify your conviction in a market move up or down – which helps add weight to your choice.
- Anything over 3x leverage is extremely risky. You’re far more likely to get rekt (lose everything) in the crypto world. Remember 30% drops are not uncommon. At 3x leverage that would be 90% of your position.
- The market doesn’t care either way about you. The market has infinite money. The market has an infinite number of bulls and bears. The market doesn’t care how much you had before, or how much you have after. The market doesn’t care if you’re a good person or not. If you’re smart or not. Adjust your mindset accordingly. You must take emotion out of it.
- Systems over psychology. It is really hard not to fall prey to hype in either direction, be it good hype or FUD (fear uncertainty and doubt). You need a system. Build one that works for you and follow it.
- The market is about probabilities. Use this to your advantage. You aregoing to lose. But if you have a system and you’ve got the probabilities in your favor, you’ll win more than you lose.
- Stay humble, stay hungry, stay ‘foolish’, and move slowly to start – you’ll want to think with a beginners mind as much as possible. You’ll want to learn as much as possible. No one is going to know it all in the market. So start slow and build over time. There are lots of opportunities to make money.
If you’re not a techie or a dude (yes, many of the people in the NFT space are dudes) then you might not get the hype around collectables.
So let’s think about it in another way.
Sports cards. Rare watches. A Banksy art piece or the Mona Lisa. A beautiful vintage Channel jacket.
Humans it seems, have a propensity to value what is rare. I believe this likely comes from ancient times, where a rare item might actually give you a survival advantage.
NFTs (Non-Fungible Tokens) are unique, one-of-a-kind (or one-of-a-code) tokens, that represent digital collectables. Because the code base for that token or item is unique, a collector could easily identify if it’s a ‘real’ version of the item or a ‘fake’ copy.
For those who are nerding it out and want to know what fungible means – it essentially means the ability of that good or asset to be exchanged for other goods or assets. Thus money is fungible – you can exchange it easily for other money, goods or services. Your desk is non-fungible, because you cannot exchange it for other goods or services very easily, and it’s not a recognized means of doing so.
Found insight and value in what you just read?
Sign-up below – and get insights on crypto, investing, digital culture and more.