Lots of momentum implies there is likely going to be a bounce as Dips start buying what they think is a Dip but it turns out to be a bull trap.
The stock market is screaming risk off right now, but what is trending on twitter is #Buythedip. Yeah the guy that graduated High School 4 years ago is a market expert on buying the dip, but lets put some perspective on it.
Nobody runs out to the grocery store to buy 3% off their favorite item, but it amazes me that they will jump in on any blip and become a dip. I want to put some perspective on being a dip and buying dips, and this is as good as any example.
If I like something I love a deal, I wait for deals, but 3% off in the stock market is not a deal, it is a trap to buy something someone else is getting rid of. Now 10% you have my curiosity, 20% yeah I will run up to the store, 30% this is the sale I have been waiting for and want to be more aggressive buying, stock up, fill up the pantry type of buying.
So back to Bitcoin:
For many 20% is a dip worth buying, but with Bitcoin , that can often be a painful buy. Coming from the stock market and getting into cryptos in 2017 I bought the initial dip when Bitcoin pulled back 20% at 13k . Lesson learned, it is much more volatile than that and I could only sit and watch Bitcoin pullback further and further and further.
However coming from the stock market, I was wise enough to take small bites on the way down, adding at 9k, 6k, and eventually in the low 4's. I used risk management to position, not go all in as that would have really been painful and made me a weak hand.
Now I am not saying we get a 85% sale here, but 30-50% is surely within reach. What you do not want to do is put yourself in a position to be a weak hand by going too big too fast on the initial dip. IF you are building a position, small nibbles, not even a bite here as there is plenty of risk to the downside.
Once again I trimmed out a little Bitcoin last night around 49k, just a little, did not like how stocks closed, and after a 10 month run of risk on, the market appears to be screaming risk off.
Bitcoin is still a risk on trade IMO and there is clearly some room to run lower, so I am not buying this dip, I would actually be more interested in selling a little more into any retest of 50k and a short setup on the and also close out my swing trade that is still open with two targets left.
I am a buyer in the low 30's, as I love a 50% sale on anything, and whether it plays out that way or not is insignificant. My goal was always to remove my initial capital and have a nice little inventory of Bitcoin at no risk. Done!
Now I will wait as patient as a Lion in the bushes looking for the right opportunity, not forcing them here.
I want to be clear also, if you are DCA this has no effect on you, keep to the plan, if it pulls back into the low 30's add a little more than you allotted, that is an entirely different strategy, but like poker, I like to play with house money and when you are playing with house money you don't want to be aggressive, you want to be patient.
long term, but I would not be surprised to see a couple months of a correction that discourages newbies, cleans them out of their hard worked capital and sets up those patient enough to follow a plan and disciplined enough to execute a strategy for the next leg higher.
Know the difference between a Blip and a Dip, if you don't you are the latter!!!!
I do want to be clear as I stated last night when I took a trim. Bitcoin has simply become too large a weighting in my overall investments and having too many eggs in one basket is not a good idea at my age. I do not have 20 years to recover, so I would rather take a bird in the hand than 4 in the bush.
You apply the same discount rules for the Stock Markets, Commodities and Forex?