This article is in the category of psychological analysis, strategy, and purely financial pitfalls. And it expresses a personal view from the observations of the ways investors have been depleted of money recently.
The pitfall of the Bitcoin – Altcoin – USD rotation
Brief information about the three BTC – Altcoin and USD
A giant rotation with each month-long cycle, investors who are careless to take profits and cut losses will be rolled into this trap, they will soon see their accounts decrease rapidly.
First of all, you need to analyze the following: When starting a trade, your USD will be converted into one of the following three currencies:
BTC – Altcoin or USD
What do big investors manipulate the market (sharks) need? It’s USD, not BTC or Altcoin. Particularly the USD from your pocket, there will be times when Whales (or Sharks) collect BTC, then turning to Altcoins, but as long as ending up fooling you to take all of your USD. BTC/Altcoin can increase and plummet anytime, but no matter what, the USD is the real value, and it shows exactly how much you lose or profit.
The first rotation
An example of the rotation that started in April 2017. To control this rotation, there are two things need to be stimulated: greed and impatience as well as an overview of the market.
The plan was implemented by increasing the price of BTC first, the long-term and continuous price increase of BTC from the end of March to April, and until May, it reached the milestone of $2000, which made the BTC fever really begin. The massive media news, super-optimistic forecasts from the user’s searching data via Google, we can see that BTC reached its highest peak of interest on May 25, 2017, was also the day it dropped the price sharply on $1500 – $ 1700.
First of all, BTC is the hottest and most famous topic that encourages most of us into traders, not ETH, XRP or LTC. Thanks to BTC, we only knew about the coin, then trading. Thus, the duty of BTC is to take advantage of fame and agreed to increase the number of new traders to the market. Then they become “sweet pies” due to their available assets and lack of experience. Thus, this first step is mainly to attract the amount of USD involves in the market.
The second rotation
After the “prey” purchased a large number of BTC, the price of BTC will level off and move sideways for several days or fluctuate in a small margin, which makes new traders annoyed. Their impatience will be fully utilized. At this time, Altcoins will be pushed up the price. Though they are very small and anonymous, when looking at Altcoins increasing 20%, 30% or even 50% every day, BTC holders will export money to buy Altcoins. According to the statistics in the period from May to June, all Altcoins increase, you can easily bay every Altcoin. To the extent that any Altcoins you buy will pump for a few days. There are many people in this phase were caught: just witnessing coin A increases, they sell coin B to buy coin A, then coin A drops, coin B increases again. (Excluding trash coin only rises once and disappears like in Bittrex).
From the recent low milestone created by Altcoin, most Altcoins have been pushed up from 3 to 5, even 10 times
Therefore, by increasing the price continuously for many days and months, you have been imposed in your mind a new price milestone for Altcoin now, and this price is very high. For example: If Strat kept fluctuating for a month from 39000 STS (1 sts = 1/100,000,000 BTC), the lowest was 35000, we guarantee there would be dozens of investors think 32000, 30000 sts is super cheap ever and buy all of them. Then more careful people will see that 25,000 is perfect for purchasing, it has never dropped to that rate. This is similar to any Altcoin, including higher coins like ETH.
The patience runs out along to the time, the traders wait for so long that the price has not dropped to the price they originally planned to buy, they will have the default that it cannot fall to certain rates. And they buy Altcoins to trade short-term and surfing. Initially, these players will be successful, easily buying Altcoins and making more profits than BTC. So this phase is to convert the BTC / USD of the traders to Altcoin, now they have been taken all money.
The third rotation
It can be said that the number of traders who buy and hold Altcoin in May, June and even early July has peaked. By surging Altcoin price, they gave all their beginning USD in exchange for Altcoins. Insisting on the price caused by the second phrase causes them to not stop losses when the price drops. If there were to be a survey, it’d be obvious that at least 80% of beginner traders will “die” of not stopping loss. This is the harm of overconfidence caused by the second phrase. Sometimes there will be no sign that you have hit rock bottom when you have already been there. What seems to be the bottom today might just become a peak tomorrow. Altcoins can plummet to a price that we can never have imagined, and what we have known about Altcoins may not at all help. By bulldozing BTC and Altcoin prices before August 1, the sharks have gathered both BTC and Altcoin by now. You have to compare the Altcoin price with USD to know when it is the cheapest.
In terms of trade solely, this is all we need to care about. While the current price of Altcoin/BTC is killing off the margin traders to take all their money. The holders now can not profit anymore, in fact, they’re just waiting for the end to come. To be honest, the current price if was just for normal trading, the price of Altcoin / USD wouldn’t be as terrible as the previous session on August 1.
So after having taken your BTC and your Altcoins, of course, they must push the price of BTC up to start a new process and make profits on USD. Whoever holds the most BTC in this period, when falling into this mental trap, will willingly hold less BTC than the sharks. The sharks are the dominator of this game, they have their tactics and there’s only them who can keep enough BTC.
In the BTC – Altcoin – USD cycles, there are usually a few smaller rings:
- Low Altcoin / BTC Price: To decrease your BTC, even though the price in accordance with USD is not cheap. After the price of BTC went down, you will have lost a bunch of money, including the number of BTC and the decreased BTC.
- High Altcoin / BTC Price: To fool your sense, although the price in USD is not high in the present as the price of BTC is typically low. Still, to buy Altcoins now, you need a lot of BTC and the shark will take all your BTC or the number of USD we have put in to buy BTC, then buy Altcoins.
- A small round of profit extracting: There will be a few small profit extract rounds that are visible. After the Altcoin/BTC price increases, it will be time for the BTC/USD price to rise. (Reason: sharks have quitted ever since Altcoin to BTC when it is necessary to push up BTC to get USD).
- The intense drop of BTC price: Taking away money from traders who are only trading BTC (BTC / USD), usually when the number of new investors tossing money hits the threshold and on the way to decline.
There’s always a time when you thought of not trading Altcoin, just BTC/USD or simply Coin/USD. And actually this is a safe way to trade, not to mention the most effortless. Unfortunately, greed and the Altcoin trap is a perfect couple to go with the mischief of the exchanges, where most small Altcoins that push their prices by 5 to 10 times higher can not be traded in USD. Having to trade in pairs of Coin/BTC will confuse you about whether you are making a profit or a loss.
If you were to trade merely BTC / USD, honestly you would not have experienced so much loss, or even could be making profits and enjoying the game.
Analyze, predict and plan for the future
First of all, please keep in mind that this is just a conspiracy theory based on self- experiences. Therefore, it is only a source of information for reference. From our point of view, if the rotation repeated like in March 2017, the scenario would look something like this:
BTC will keep rising to the point where people feel that coming back to about $3500 is hard enough, left alone recalling how unlikely it was for BTC to drop back to $2500 when it was reaching $2700, and on its way to reach $3000 (May 2017) and then how it exploded on the 25th May 2017 ($3000 to $1700, some exchanges increased $1300, $ 1200 in a few hours). If completely similar to the old scenario, BTC will have 1 Flash Dump: Discount in bubble explosion and sell-off style. Basically, if all the money is in BTC right now, Altcoin has nothing to suck from, which will be a chance to exploit the most out of them. If BTC declined so quickly, it would rebound also very quickly. Basically, the holder of BTC will not suffer too much as long as the margin account is not burned or sold off. But still, BTC holders will lose at least a bit.
After Flash Dump, BTC will recover very well, as BTC will stay at a stable level or increase slightly. Now back to Altcoins like in the second phrase. If you are at the margin, there is not much to do. But if you are holding Altcoin, it will become a money vacuum again, after BTC has done its duty, increasing prices continuously for more than 1 month (Phrase 1).
If you have not done anything yet, wait for the third phrase. The exchange turns red for both BTC and Altcoin. It will take a long time before the second phrase; or you can wait for the second rotation officially starts, then do as before, to just buy Altcoin when buying any Altcoin will work. And this time, we must be conscious of when to stop loss.
There is a principle to our skimpy investment: When the price of BTC is low, we try to spend more money to buy BTC. Similarly, when the price of Altcoins is low, we buy more Altcoins, although it might just be peaking when it seems to be as cheap as compensation. And finally, when USDT is cheap, there are sellers who sell lower than 22.5 or base on Remitano’s BTC price and BTC/USD price which sometimes you can buy the price for only 22.3, 22.2 and even cheaper, now you should increase your USDT amount. Everything will take turns, BTC will blow up, the. Altcoins are in order, and eventually, there will be times when people spend 25,000 or even higher to buy USDT. And the important thing is to learn to stop loss, patience is not the same as obstination. Next is the most important method to trade short-term.
Finally, keep in mind that if there is nothing too sudden in the trade coin, the BTC/USD trade is still the safest and the most typical. Now, people are beware of Altcoins like a kind of mobile disease, but then if there are 5 – 10 coin pumps, along with buy signals in a series of coins, we believe the majority will switch from BTC to Altcoin soon. You don’t need to avoid trading Altcoin, it’s a great opportunity to make a profit, but remember to always follow the market to exit to BTC / USD when needed. As long as there has not been a strong change to BTC, we can be assured with BTC or USD in our hands.
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