Measuring or discerning who are the forces of the market in which we invest or trade (and what these forces do or do not do in it), is the means that will allow us to make the correct movements when buying and selling a cryptocurrency.
Is it important to make the right moves in the market when investing or trading?
Of course yes, because it will depend on it that we make profits when we have to and stop losses when necessary.
Because in the markets everything is about doing things at the right time. You do not believe me? Let's take the example of the current moment of the crypto market, which, as we already know, has been in a continuous downward trend since the beginning of 2022.
Better yet, let's not talk about the entire crypto market, but only about the most important and relevant cryptocurrency in the world; Let's just talk about Bitcoin.
Many people believe that Bitcoin is going to hell for a myriad of reasons ranging from the fact that it has fallen below the previous cycle's high price (the highest price before the most recent hard fork that occurred in 2020); or even because of the fact that in the monthly analysis graphs, the long-term analyzes seem to point to a loss of strength that, although it has not yet led BTC to be in a downward trend in the monthly period; he seems very inclined to do so.
And the truth is that thousands of reasons can be argued why the price of Bitcoin will not fall forever; but in the current market conditions; most people won't understand it; and this is so for the simple reason that in the markets, most people operate based on their emotions and feelings regarding what they believe is happening. This of course is part of the why and the reason why prices in the crypto markets are often so erratic.
Therefore, it doesn't matter if someone accurately explains to the world that Bitcoin is much more valuable than its mere "monetary value" of the moment; because it is a concept that seems to collide with the level of understanding of most people who move in the markets.
Now, going back to what I was saying initially, it is important to know how to measure the behavior of market forces, to understand what is really happening in that market; because this will allow us to act appropriately depending on the circumstances and obtain higher profits or lower losses respectively.
And I say this without hesitation; because many people mistakenly believe that it is possible to win in the markets 100% of the time; and this is absolutely false; sometimes you win, and sometimes you lose. There are only two possibilities, so this is exactly like Yin and Yang in Eastern philosophy.
In any case, what we can certainly do by acting in the best possible way in the markets is to greatly increase our chances of making a profit and methodically decrease the chances of losing a lot of money in the process.
So making the right moves in the crypto market is what makes us better at trading and investing in them. The proof itself is in Bitcoin, most people complain that the Crypto Winter has taken most of their money, or that their losses have been considerable because of everything that has happened with the price of BTC in this 2022; but is this really has another explanation.
The majority of those who complain like this are really losing their asses, because they simply did not know how to take profits on time when they should have; or because they did not know how to stop the losses at the best points along the way, even when all the technical analysis indicators clearly told them the downward path that awaited Bitcoin in the short and medium term.
So make no mistake, you have to understand that the market gave many warnings, and those who psychologically and mentally were not prepared for scenarios contrary to their expectations, are seeing a very ugly time right now.
Therefore, understanding that markets move based on supply and demand, and that these are the only two dominant forces; also allows us to understand that most of us who do not have millions of dollars to invest are little fish in this immense sea that is the Bitcoin market; therefore we cannot do anything forceful that can affect the markets by ourselves; because we know that those who really move the market forces are the whales.
Whales are the driving forces of the market
So the whales are the real driving forces of market movements (especially the crypto market). The whales move millions of dollars when they make their immense movements of funds in one direction or another; and this causes the markets to take positions in upward or downward trends alternately.
In fact, the theory of accumulation and distribution cycles in the markets tells us that the current bear cycle of Bitcoin is happening because the whales distributed their holdings in the upper part of the range (on a monthly timeframe), and exited the market. Therefore, when the whales begin their accumulation cycle, and then accelerate their accumulation, that is when the price of BTC will rise again and the market will position itself in an uptrend.
But this will not happen until the whales return to the market again, of which there are already signs; because just today I read a news on Cointelegraph that mentioned the fact that whales are currently putting thousands of BTC (I think it was 50k BTC or something), back on the exchanges.
If this is true, it means that they are positioning themselves to start trading again, and that will mark the beginning of the accumulation cycle that must occur for the current cycle or market trend to reverse.
And what can we little fish do?
Well, as I said, knowing that the whales are the driving forces of the market, it only remains to glimpse what the whales are doing or more likely to do, and then act accordingly.
I must clarify that doing it is not easy for many reasons; because it requires, first of all, knowing how to control emotions in the face of what is currently happening in the market at the price level; Second, it requires an understanding of how market prices are affected and how to measure exactly what is happening; and thirdly, it requires that we have enough liquidity to invest and trade without worrying about basic living expenses.
The former refers to simple emotional control; you must know what you're doing and don't hesitate to do it. The second refers to having knowledge of technical analysis and fundamental analysis to really understand how the whales are acting in the markets and understand the best course of action for us. And the third refers to the fact that we must know how to manage our money and our capital well so as not to compromise our personal well-being by putting money on the market that we should set aside for our personal living expenses. Regarding this third point, we must understand that if we are going to put money in the crypto markets, it must be money that we do not need to cover our personal and family expenses; because these markets are very volatile and risky, no matter how promising the outlook may look at the time we decide to invest or trade.
In any case, the most important thing of all that I have explained is, in my opinion, knowing how to understand how whales move. And we can understand this on a fundamental level when we see, for example, news reports that Bitcoin whales are putting thousands of BTC in or out of cryptocurrency exchanges. If the whales are putting BTC on the exchanges, it means that they are preparing to trade and at some point this will mean an increase in the price of BTC and a very likely change or continuation in the current market conditions (as the case may be). On the other hand, if the whales are withdrawing their BTC from exchanges, it means the exact opposite, i.e. further price declines and a very likely change or continuation in current market conditions (depending on the trend can be expected. underlying present at the time).
It can also happen (in the second case) that the market enters a closed range and you have to act accordingly when trading or investing in them; but that's another story.
Now understanding what whales do on a technical level, on the other hand, can be achieved by understanding Wyckoff's and Elliott's theories; and also by using technical analysis indicators like the RSI, Ichimoku, MACD and the DMI.
So Emphasizing:
Only when we understand what the whales are doing (which are the ones that move the market forces); it is when we can act more appropriately in them. Therefore, we must be very clear that we must never operate against the trend, much less blindly or without really knowing what is happening in the market at the present time.
So, always, always, always, we must trade or invest in favor of the trend; To do this, we must also be very clear about the type of trader or investor we are. Therefore, if we are traders, we must be aware of whether we are scalpers, intraday traders, etc. If, on the other hand, we are investors, we must be clear about whether we are medium-term investors or long-term investors).
Knowing this, we will be able to carry out the corresponding analysis of the graphs (in terms of technical analysis); and the corresponding analysis of the news (in terms of fundamental analysis).
And let us always remember that only when we understand what the whales are doing, can we go in the direction in which they are swimming and take advantage of the movements for our own benefit.
In short, I have exposed endless reflections. I hope you have understood everything that I have tried to explain to you today with this post.
What do you think about the topic that I have addressed today in this post? Please comment.