Month: February 2021

Crypto 24/7, isn’t it great?

| roger nunn

When I started buying and selling Bitcoin I was happy to find that the trading can be done at any time, that the markets never sleep. This was good because it is so different to the stock markets, which are only open 5 days a week, as well as being closed on national holidays.

However, there is a downside. Me, not being a machine needs to eat, sleep, have fun and socialise with other people. While I am not in front of the computer I cannot monitor my potential gains/losses from crypto trading.

I have decided that trading has to take second place to normal living and so deliberately leave my computer alone, obviously have first checked that I wont lose badly in the event of a big drop in the market. In fact, this is the case even when I am sitting in front of my computer as I cannot effectively monitor all the different parts of the crypto market and its multitude of coins, tokens and derivatives. I haven’t even got my head around the future direction of DEFI, and its constant evolution.

Therefore I have a plan of switching on and trying to follow the general direction of the market before formulating any buy/sell plans for the day.

I have to say that I really don’t see any way that a human can get a good feel on all the parts of the market simultaneously. This observation is borne out by listening to many different online trading YouTubers, who seem to be able to make money by using different tactics in different markets.

So I like using trading bots to act for me, but so far they seem to be limited to trading crypto pairs chosen by me. I am looking forward to the development of Machine Learning based decision models that decide what to buy and sell in real time. It will be less exciting but a good way to create a passive income without doing anything.

What to do with the money

| roger nunn

At the moment we are in a Bull market for crypto. It actually just means the that prices (in Fiat currencies like the US $) are generally rising. Bitcoin’s market cap (value of the number of coins times the current price) is more than 50% of the entire crypto market and so the market generally follows its lead.

There are fortunes to be made by trading within crypto, getting into coins just before they pump. Obviously choosing a coin is an inexact science, but it is exciting when you catch the wave.

The Bull market will eventually end and there are numerous people explaining what they think will be the timing, as you can expect huge reductions in value, especially with low cap alt coins. So the widely acknowledged strategy is to sell some of the coins as they go up “locking in” profits. This works well enough and you can then re-invest the profits in the next potentially good high flyer.

My problem is the same, however much profit I make. Assuming that there will be a Bear market sometime this year, I need to know how to keep my profits safe.

Keeping you money safe is the same problem whether or not you are a crypto enthusiast. The explosion in supply of fiat is very likely to result in inflation in the long run, so getting out of crypto is like getting out of the flying pan into the fire.

So it looks in the end that hodling in crypto (some at least) is going to be a long term strategy. I’m waiting for more people to accept bitcoin for big purchases, like houses or cars.

Exciting financial changes are here but not everyone realises it yet.

Bitcoin is going through the roof

| roger nunn

Bitcoin is currently worth around $46,000 each. As usual, most of the altcoins follow suit with some dropping in value and some making spectacular gains, far higher than Bitcoin itself.

It is a rising market, where it starts to feel as though the sky is the limit. I prefer the expression of going through the roof as it indicates a barrier and brings the expectation that there will be a drop afterwards.

As far as making money is concerned, sitting and hodling in a rising market is just asset appreciation. It looks like a good money maker but it’s only real when you sell the bitcoin and realise the profit. It’s a good feeling when the market is rising and you can see yourself getting richer.

However, being a trader is something else. It means studying the different coins, buying low and then selling as they rise to take the profit. It is less exciting because you can always imagine how much more you could have made if you had waited a bit longer.

The harder thing is how to make money on a falling market, something that happens often. It means building a buy and sell strategy that makes use of the relative difference in value between various coins, buying and selling to take advantage of price changes.

How to do it? This is the trail that many of us are hoping to follow. It’s not easy.

What is an altcoin?

| roger nunn

History shapes language. First there was Bitcoin (there had been previous attempts at electronic money but no real success). Just ask most people about cryptocurrency and you will get comments on Bitcoin being a criminal’s money. Most people are not even aware that there are other forms of crypto.

The development of Bitcoin spawned a lot of interest in developing alternatives, supposedly able to address its short-comings. Disagreements in the mining communities resulted in copies (hard forks) of existing coins and developments of new ones. Extra ideas, such as programmable inputs were also brought in.

Now there is Bitcoin, Etherium and lots of alt-coins. Lots and lots, measured in thousands of new coins and tokens. I have separated Eth from the altcoins because of its huge market capital and because it is used a base for the creation of many other forms of crypto.

Bitcoin has increased hugely in value over the past 10 years (large fluctuations make it more exciting), so it is now considered a store of value, rather than a currency. However, its increases are dwarfed by some of the increases (and price drops) in many of the altcoins.

The problem is knowing how to choose an altcoin to buy and then when to sell it. Even when you find one that is increasing quickly, it is exciting enough that your inclination is to go on riding it up to the top. Where is the top? Nobody knows?

So what to do? Build and apply a strategy (logic not emotion) systematically. Usually this means researching a coin, buying it and then selling when it reaches a pre-determined price. Not very exciting, but it can be profitable.

Apparently it is now an alt season. Try to figure out what that means.

One way only from fiat to crypto

| roger nunn

When you want to buy crypto (probably bitcoin) you can create an account on any of a number of exchanges and simply transfer fiat currency straight into the crypto of your choice.

This might be more difficult in a jurisdiction with monetary controls but it works easily for me, being based in the European Union.

Once you have the crypto on your exchange account you can trade it for other cryptos or transfer it easily either to another exchange or to a wallet.

It’s seamless, easy, usually cheap and very fast and of course it operates 24/7.

Returning the crypto to fiat feels slow and heavy by comparison, with banks taking some time to make the money available. It really feels like a step backwards in time, like returning to writing cheques for bills and then waiting 3 days for the funds to clear.

I can wait for universal adoption of crypto, easy transfers without the cost and time lost using fiat