🗓 July 25, 2024
What to do when the market drops?
(A complex post, not for the faint-hearted, lots of words)
Keep calm, just keep calm!
Once again, Wizard observes how the slightest market dip instantly changes the mood of most Middle-earth inhabitants.
How can this be? - ask the most impatient and meticulous ones.
After all, there are so many positive news:
🟢The SEC officially approved the launch of spot ETH-ETF trading
🟢The long-awaited Bitcoin halving took place on April 20th
🟢Beijing unofficially supported the legalization of cryptocurrencies and expanded the e-CNY program to Hong Kong
🟢US presidential candidates are starting to praise the crypto industry, trying to gain a few extra % in the upcoming elections
🟢SEC head Gensler should have been fired by now
But the market is falling. Bitcoin crossed 60K (which is already taken for granted) and isn't growing anymore. Hedge funds were supposed to bring trillions of dollars into the crypto industry. And where are those trillions? 🤔
Wizard will try to answer this question.
Conformity!
Are hobbits familiar with the «Asch Experiment»?
No? Then Google it. 🔍
...
Now that you've become a bit more educated, look at everything from the perspective of a market maker, from the perspective of crypto exchanges that want to extract maximum profit from the current situation (which is unique and may not repeat in the next decade).
Tens of millions of "smart people" who monitored the news and opened a bunch of long positions are dreaming of «making a quick buck» and are watching the charts with bated breath. But who will just hand over the money to them so easily? 😂
If somewhere something is gained, somewhere something is lost. Manipulations have always been and will be on the stock market, especially on the poorly regulated, in terms of law, crypto market. When the majority expects Long, exchanges will do everything possible so that the greediest and most impatient get a margin call instead of profit. And the larger the leverage in a futures trade, the harder it is for a trader to hold a long position. And a slow, psychological price drop of the asset forces traders to either pour more money to hedge their bets and increase risks or close the position at a loss.
Why is Wizard writing about futures? Because that's where the main money is made. 💰
In spot trading, it's a bit simpler, but the principles are the same.
And what does conformity have to do with this?
Well, when the market slowly goes down, it creates the illusion for the average person that «all is lost» and «everyone for themselves». And since the overwhelming majority of people are conformists, the natural instinct to follow the majority will force those we call hamsters to sell. And the longer the slow decline continues, the more conformity will press down on the hamsters. 🐹
It's hard to go against the natural protective instincts instilled in us. I hope you have already read that conformity is a protective mechanism that helped our species survive for tens, if not hundreds of thousands of years of development.
Leonardo da Vinci 📜
🎓 Attend the wizard's school
🎙 Listen to Wizard FM radio
👍
What to do when the market drops?
(A complex post, not for the faint-hearted, lots of words)
Keep calm, just keep calm!
Once again, Wizard observes how the slightest market dip instantly changes the mood of most Middle-earth inhabitants.
How can this be? - ask the most impatient and meticulous ones.
After all, there are so many positive news:
🟢The SEC officially approved the launch of spot ETH-ETF trading
🟢The long-awaited Bitcoin halving took place on April 20th
🟢Beijing unofficially supported the legalization of cryptocurrencies and expanded the e-CNY program to Hong Kong
🟢US presidential candidates are starting to praise the crypto industry, trying to gain a few extra % in the upcoming elections
🟢SEC head Gensler should have been fired by now
But the market is falling. Bitcoin crossed 60K (which is already taken for granted) and isn't growing anymore. Hedge funds were supposed to bring trillions of dollars into the crypto industry. And where are those trillions? 🤔
Wizard will try to answer this question.
Conformity!
Are hobbits familiar with the «Asch Experiment»?
No? Then Google it. 🔍
...
Now that you've become a bit more educated, look at everything from the perspective of a market maker, from the perspective of crypto exchanges that want to extract maximum profit from the current situation (which is unique and may not repeat in the next decade).
Tens of millions of "smart people" who monitored the news and opened a bunch of long positions are dreaming of «making a quick buck» and are watching the charts with bated breath. But who will just hand over the money to them so easily? 😂
If somewhere something is gained, somewhere something is lost. Manipulations have always been and will be on the stock market, especially on the poorly regulated, in terms of law, crypto market. When the majority expects Long, exchanges will do everything possible so that the greediest and most impatient get a margin call instead of profit. And the larger the leverage in a futures trade, the harder it is for a trader to hold a long position. And a slow, psychological price drop of the asset forces traders to either pour more money to hedge their bets and increase risks or close the position at a loss.
Why is Wizard writing about futures? Because that's where the main money is made. 💰
In spot trading, it's a bit simpler, but the principles are the same.
And what does conformity have to do with this?
Well, when the market slowly goes down, it creates the illusion for the average person that «all is lost» and «everyone for themselves». And since the overwhelming majority of people are conformists, the natural instinct to follow the majority will force those we call hamsters to sell. And the longer the slow decline continues, the more conformity will press down on the hamsters. 🐹
It's hard to go against the natural protective instincts instilled in us. I hope you have already read that conformity is a protective mechanism that helped our species survive for tens, if not hundreds of thousands of years of development.
He who wishes to be rich in a day will be hanged in a year
Leonardo da Vinci 📜
🎓 Attend the wizard's school
🎙 Listen to Wizard FM radio
👍