Real Trading #1 Market is Down
Market is Down
Hi guys, this is what we are dealing with currently:
LTC has traded below 0.01200 against BTC most of the day.
As a traders we have an option either to trade against fiat or other crypto. Since I believe that BTC price will inevitably go up (More on that in future blogs), I am choosing to trade against other crypto.
Current downturn in pricing is actually very exciting. Alt coins are very sensitive to the price of bitcoin and tend to do very poorly against bitcoin during market turmoil. These poor alt coin performances create buying opportunities for bitcoin holders.
News sites quote analysts who predict BTC value to dip below $6,000. Personally, I believe this is highly likely. One of the reasons is that fall market boom created a rush of miners, many of whom were not efficient in sustaining their operations. They could only exist in the environment where crypto price was high. Because markets are efficient, a price correction is needed to remove excess amount of miners. According to various news sites, it takes about $6,000 in costs to produce one BTC. A dip below $6,000 will result in a mass exit of miners and, in my view, stabilization of the market as there will be no incentive for miners to sell mined coins short term; Thereby, reducing supply and creating upward pressure for BTC price.
Another stabilizing factor of bear market is disincentive creation of "scam" tokens/coins. As the market plummets, traders are less eager to take risks and will look to purchase established crypto assets.
While market is correcting itself, my job is to look for alt currencies which are under priced. LTC and to a lesser degree BCH are approaching recent lows against BTC. I intend to pull trades at those lows. From late Oct 2017 and well into Dec 2017 LTC traded consistently below 0.01 BTC. If markets continue corrections, we should see further sharp decline in LTC price. My strategy is to scoop LTC at a price point between 0.008 and 0.01 BTC.
BCH is approaching a recent low of trading below 0.1 BTC. In April 2018 BCH traded 0.093 to BTC before exploding and recording over 60% gain against BTC. Further analysis is required. Given that BCH will dip below 0.1 BCH I might make a move depending on how rest of the crypto markets behave.
What do you think? Leave your thoughts and comments below!