Another apt post for the day, given the BTC dump that just happened once again, it how to make sure you profit when BTC dumps. With trading Altcoins, the aim is to increase your stack of Bitcoins when USD/BTC is moving sideways; that way, you have more Bitcoins and therefore more USD (or whatever currency you want to earn).,
When BTC moves up sharply, it is wise to exit your Altcoin positions and hold Bitcoin whilst it continues to rise. Once it stabilises, you can start trading Alts again. This is because many people will panic sell Alts when they see Bitcoin making moves, not to miss out on the rise. If everyone just held, it would be fine but they don’t. So, it’s better not to be left holding the bag.
However, what do you do when BTC goes down? If you sell your altcoins, you’ll be left with BTC which is going down. If you hold your alts, you’re likely to make a loss as well (though some altcoins will continue to rise anyway; in the last crash, I made a 60+% gain on DAR which I was holding pre-crash anyway). So, what do you do?
Well, I prefer to hold my alts (as eventually, if you made the right picks, they will bounce back once BTC stabilises) and to short Bitcoin. For this, I need to have some FIAT on Avatrade ready to deploy. When I see a bunch of long orders being liquidated (keep an eye on Twitter profiles like @BitmexRekt for these signals) then you know that some fairly big whales are closing their long positions; that means a dump is incoming.
So, you open a short position on Avatrade, using whatever leverage you’re comfortable with (please remember, the higher your leverage, the higher your risk of losing everything if the market moves the wrong way) and then close the position when you see short positions being liquidated (or just when you think you’ve hit the bottom). That way, if done correctly, you can now profit in all three market directions – Bitcoin stable, Bitcoin bullish and Bitcoin bearish.