So yesterday was another dramatic day for bitcoin. Today's blog (which I recorded last night) I discuss buying back into Bitcoin.
Heads I win, tails I win
The reason why I take profit is for days like yesterday. As discussed in a previous blog post, I like to sell a small percentage of my bitcoin as the price doubles. Psychologically this suits my personality.
If bitcoin continues going up I enjoy the gains with the bulk of my holdings while having fiat to diversify with or spend.
If bitcoin drops I get the option of buying back in and either increasing my bitcoin holding or locking in fiat profit.
Here we go again
This 'crash' reminds me of the last time I bought the Bitcoin dip. It was around the time of the Jamie Dimon/ China Banning bitcoin FUD.
Bitcoin dropped from $4k to $3k, it felt like a market overraction to news. Having taken profit at $4k, I couldn't resist the temptation to buy back what I'd sold. One of the good things about buying back is that you get a good feel for where the resistance ponts are. So rather than selling at $4k when bitcoin rose again, I took profits at arouns $5k.
When bitcoin first hit $8k, my next profit taking milestone I rode the uptrend ans took profit at $11k. Sentiment was such that it seemed certain bitcoin would break $10k. I was more disciplined with taking profit at $16k as $32k (my next profit taking target) seemed extremely headed territory indeed!
I wanted to buy the dip to $11k in December however I was in India. It may have proved a blessing as I've been able to buy a bigger dip. So just over $8k was my re-entry point.
Waiting game
Now I sit on my hands and my bitcoin bag. If it goes up quickly, great. If it goes sideways or down slowly, I'm prepared to bunker down and ride it out for 18 month, 2 years if I have too, like I did in 2014. If it crashes further, saybto $4k I'll take a view on whether to buy even more.
The good thing for me is that there are ways to earn cryptocurrency, Steem is a prime example. There are also other projects that could potentially grow in fiat value even in a bitcoin down market. More importantly the downtrends are an opportunity to focus on the technology and potential contributions I can make to the eco-system. I tried to do it during the last bear market. I'll be in a far better position to add meaningful contributions in the next one.
Skepical Contrarian
When it comes to trading, I prefer making decisive moves or hedges around big events or milestone to day- or swing trading. Being a contrarian to over-zealous public sentiment has worked well for me. I'm naturally skeptical of the mainstream narrative as 90% of "news" turns out to be over sensationalised horseshit in retrospect. People will write or say anything for clicks.
For me as long as the fundamentals of the technology is strong I remain long term bullish. However I always hedge against short term exuberance as markets, like life, never progresses in straight lines.