🧘‍♂️REVEALED: 2021 Bull Market Strategy

Market Meditations | October 22, 2021

7 tips you NEED to know.

Dear Meditators

We’ve been around for several market cycles. Today’s meditations will highlight common mistakes we see investors and traders make in bull markets. These are tips we have used ourselves in the past. 

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Delighted to say this article is brought to you by FTX. Make sure to use our link to get a 10% discount. Based in the U.S? Here’s a discount link for you: FTX.US.

? In A Rush? 

?Flash Crash Fever

With the long-awaited approval of the bitcoin (futures) ETF coupled with the recent uptrend bitcoin has been in, it is no wonder we made a new all-time high this week, even if it was short-lived. 

Of course, many all-time highs are followed by a pullback but if you were trading on Binance.US yesterday, you may not have expected the 88% pullback experienced on the exchange for US residents…

  • As reported by The Block, bitcoin topped out around $67,000 until a flash crash to $8200.00 shocked the market.

  • The Block reached out to Binance.US, who responded that the flash crash was caused by a bug in an institutional client’s trading software algorithm, declaring the bug has since been fixed. 

  • While this affected the worldwide market, other exchanges did not experience such severe crashes

  • Other platforms offer safeguards like Coinbase’s ‘price protection points’ or ‘PPP.’ This would allow an order to fill partially up to the PPP cancelling the remaining portions. 

Prior flash crashes like the one in April this year caused $9 billion in liquidations, most of which occurred on Binance who had $4.43 billion of liquidations. The April crash was caused by a coal and gas accident that triggered a power outage forcing bitcoin miners to shut down. After the mining hash rate fell by 50%, the price followed. 

There are various reasons to choose an exchange, such as your geographical location, fees, accessibility, and volume and Binance does have a lot to offer; however, the all too common flash crash may present an opportunity for other exchanges to target their customer base offering safer conditions.  

Our Market Meditations are longer format educational segments. Each letter features a Market Meditation which will deep dive and analyse a relevant crypto event, theme or tool. 

? Our Bull Market Strategy

TIP 1️⃣: Don’t Sell Early 

  • Don’t fight the trend. When we break out, we tend to see an explosive uptrend afterwards. Sometimes these moves are mammoth; capturing them is extremely powerful. 

  • Remember: the trend is your friend. 

  • This is not just true of bitcoin, altcoins can also behave this way. BNB, MATIC and SOL are good examples. 

  • Focus more on macro risk management instead of selling at a certain point. For instance, you can use a trailing stop loss or a moon bag. A moon bag is where you keep a certain % of your position because whilst you want to lock in some profits, you believe the asset will moon / the macro trend will continue. 

TIP 2️⃣: Do Not Try To Predict Tops/Bottoms

  • This is similar to selling early. You assume the top so you either sell or you try to short the top. Truth be told, we haven’t come across many people who have been successful in crypto through this type of strategy.

  • Most people we’ve come across throughout the years have done much better riding the trend. 

TIP 3️⃣: Do Not Overtrade

  • We mentioned in Tip 1 that we can see serious price pumps in a bull market. The temptation is to open a long position in every altcoin under the sun. Resist the temptation. 

  • Instead, try to form a strong thesis and back it with conviction. This, you gain from backtesting and following the right people. Focus on assets you understand and ideas you believe in. You don’t need to capture every single pump. 

TIP 4️⃣: Buy Dips 

  • For those positions you have selected, consider using a trailing Fibonacci Retracement to enter a long position. Draw your usual levels and wait until a retracement to the 0.236 or 0.382 level to enter a position. 

  • For more on drawing Fibonacci levels, check out our guide

TIP 5️⃣: Manage Your Risk 

  • Following on from the above example, perhaps you set a stop loss at the 0.618 level. Whatever your strategy is, make sure your risk is managed.

  • This also means you shouldn’t all in on one asset. Portfolio diversification is just as important in a bull market. 

TIP 6️⃣: Focus on News/Events 

  • Don’t ignore fundamentals and on-chain metrics. The charts are important but they are not everything. To not have a sense for what’s going on in the rest of the market is a clear disadvantage. 

TIP 7️⃣: Protect Your Health 

  • We know that bullish market conditions are exciting and the temptation is to prioritise trading and investing over sleep, diet, exercise and socialising. Not only is this damaging to your health, it will likely negatively impact your trading and investing too.

  • There will always be another opportunity so try to take care of yourself. 

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? B-1 = $420 For FTX

2021 has been a stellar year for FTX in the publicity department. From acquiring stadiums and sports teams’ partnerships to deals with League of Legends’ championship series (LCS), the crypto derivatives exchange is clearly very serious about its push to acquire mainstream status. 

  • Yesterday FTX announced the closing of a Series B-1 fundraiser totalling more than $420 million.

  • The list of sixty-nine investors included accounts managed by BlackRock, the world’s largest asset manager. 

  • In an interview with CNBC, Sam Bankman-Fried, CEO of FTX, said the most likely use of the funding would be acquisitions and investments.

  • FTX has experienced explosive growth since July, raising its user base by 48% and average trade volume by 75% to average of ~$14 billion daily.

Things are obviously looking up for FTX, but what does it mean in a broader context?

Cryptocurrencies are known for their volatile price action, yet investors and institutions continue to push the overall market cap to new all-time highs. Even though BTC made a new ATH yesterday, we all know it could crash tomorrow. That’s part of the wager. With titans of industry shelling out hundreds of millions of dollars to invest in a cryptocurrency exchange, it looks like the long-term success of crypto is still the safest bet.

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??‍♂️✍️ Stories in this newsletter were written by D. Beverly, Kyle F., Max P., Nick T., Kimia K., Ellen B. and Koroush AK. Graphics were produced by Gerasimos P.

Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here. 

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