Reverse currency war in the world

 Risks of the digital currency game

You must watch here, the cryptocurrency market is one of the most volatile and violent markets. Ups and downs with terrible gaps happen in a few hours and days. For example, in November 2013, the Bitcoin price reached $1,000 - 14 months later - in January 2015, it collapsed to just $170. A closer analogy, just a year ago, i.e. in November 2021, the price of one bitcoin reached 68 thousand dollars, and a few days ago, the price collapsed and approached only 15 thousand dollars. These fluctuations are not limited to Bitcoin, they do happen to other cryptocurrencies as well. Since we are currently in the plunge phase, in other words, at a time when the cryptocurrency market is experiencing one of its worst times, we need to slow down and ask some questions of significance, such as:

1. Why are cryptocurrency prices experiencing such grapple fluctuations? Who is responsible for them?
2. How can we predict market motion by tracking industry insiders?
3. What is the best time to step inside and invest in the digital currency markets?
4. What is the best investment strategy to follow?

Risks of the digital currency game

If you want to invest in stocks, currencies, indices, bonds, cryptocurrencies, etc.,

Many leading companies in this field sponsor this field and many of them are among the best companies in the market. These leading companies have financial brokers around the world who have the necessary licenses to develop this field.

Over the past months and weeks, we have seen the dramatic downfall of cryptocurrency value for several reasons related to the global economic atmosphere, surging inflation, and economic recession, adding that most central banks all over the world, led by the US Federal Reserve, adopted raising interest rates, as well as a set of turmoil's that grappled the market, such as the implosion of Terra Lab, with its currency Luna, and its stable currency USTC. In addition to the Russian tendency to ban trading in digital currencies in early 2022, specifically before the Russian war on Ukraine. In such a blue global economic climate, investors are fleeing high-risk assets, such as cryptocurrencies, in favor of safer havens. This was reflected in the prices of digital currencies as a result, and we have already witnessed a continuous plummet over a full year. By November 2021 specifically, the price of the most important and prominent currency among the digital currencies, Bitcoin, reached $ 65,000. The market continued to plummet due to the aforementioned factors until it was completely imposed a few days ago after the crypto empire founded by Sam Bankman-Fried, FTX, collapsed. Specifically, after the largest digital currency platform in the world, Binance offered to acquire the troubled platform FTX, After FTX filed for bankruptcy, the market plunged even more. Since November 2021 until now, the market capitalization of all crypto assets has dropped from $3 trillion to just $835 billion Like fiat currencies, cryptocurrency prices are affected by supply and demand. So, because of the FTX platform implosion, users are afraid and withdrawing from the market which led to an increase in supply, thus the prices went down. There is another category of investors waiting for such disasters to step inside the market and purchase. These seasoned investors use an old investment strategy called buying the dip. Here, it is necessary to slow down on such a strategy, because it can answer a question that may be preoccupying 

Risks of the digital currency game

many people's minds right now:

• If the market is plunged, isn't it an opportunity to invest and buy at a low price?

Well, we will find that the ‘buy the dip’ strategy explains this situation 

• What does this strategy simply mean? 

Look, buying the dip simply and briefly means buying a particular asset after the price plummeted. The idea hence is that investors and traders consider this asset's price drop as a profitable deal as it will not remain low forever. It is natural that there comes a time when its value begins to rebound and its price increases again. Therefore, market plunges are considered an appropriate opportunity for them to step in and buy at a low price, hoping that they will reap profits when the market recovers again. However, despite the possibility of achieving huge gains by following this strategy, there is one problem facing investors and traders during its application, which is estimating the downward trend. The strategy is based on the assumption that price declines are just temporary aberrations that will correct themselves over time. 

• But what if they are not temporary aberrations?

Here is the problem, not every asset that has fallen in price has become a good buying opportunity. This means that if we miscalculated the downward trend and the asset that we bought continued to plummet, for example, we will lose and we may have to keep the losing asset until the rebound occurs. One must keep an eye on timing and wherein the market is headed. This will not happen unless we are aware of everything taking place within it, so when it comes to making a decision, it is based on a sound basis. Now, if we want to summarize the buy-the-dip strategy in simple words it would be: buying takes place when the whole market is selling, not when there is an overbuy. We notice from the movement on the two curves that whenever a collapse takes place and the price of Bitcoin downfall, the number of wallets that contain 1 Bitcoin increases, which means 

Risks of the digital currency game

that there are people who apply the buy-the-dip strategy and step in to buy Bitcoin at some point when the prices sink as we see on the screen, for this reason, that period is called accumulation. Since we are talking about opportunities to step into the market at times of price decline as you have seen. Let's talk about another factor that affects prices apart from the sudden events that happen. We are talking about normal times here.

• Which party wages the industry up and down according to its interests? In order to achieve profitability by controlling supply and demand?
• The industry whales or the market top holders, to make it clear; are not the regular kind of investors who would step in and buy for a thousand or 10 thousand dollars, for example. No, those whales step in with millions [maybe billions of dollars] in order to reverberate the market and make profits. You want to know 
• who those whales are?

Those whales can be investment funds or huge financial institutions, or even a single person who manages huge numbers of cryptocurrency portfolios. According to the common expressions in the industry, who we call a whale is the one who owns at least 1,000 bitcoin,

 For example. 

The issue is not always limited to large whales, as there are little fish that can achieve huge profits by following the movements of whales through the whale alert tool, whose mission is to monitor any movements that take place in wallets that contain a huge amount of cryptocurrencies that can affect the market. It became easy to predict what would happen to the prices once you know that a wallet with 

$50 million in Bitcoin, for example, moved its coins from a cold wallet to a trading platform. How is that? Because this means, to a large extent, that this quantity has been transferred in order to be sold. Something of significance must be noticed here. When the whales knew that their movement had been monitored and that there had been investors and traders who had been making investment decisions based on their movement, they made deft tricks wherein they move a huge amount of their cryptocurrency to delude the market that they are going to sell, for example, a shock wave hits the users, so they sell. However, they only wait for the price to sink over a certain point to make the purchase, so instead of transferring the equivalent of 3 thousand bitcoins to the platform, 

For example,

They pulled it from the platform to put it back into the wallet, but this time they put in 3,500 BTC after the price went down and bought another amount. There is a person who bought bitcoins with a large amount and then lost a large amount of the purchase percentage.

 What did he do wrong in losing everything? 

The truth is that he/she was naive and stepped into the market at a time when whales are gathering their profits. They were shaking the market and raising the price to attract users more and more. He/She was amazed at the value of Bitcoin then. They decided to buy, yet the decision was galvanized by emotions rather than profound schooling and understanding of the market tips and tricks. He/She believed during the purchase that the prices would continue to increase - but after the market is saturated and the prices reach a certain value, the whales start selling in order to collect the profits that they were targeting from the beginning. So, the industry plummets while that person is immersed in their dreams. 

What should we do exactly?

The main rules to consider when entering into digital currency trading:-

1. The first rule: invest only the amount you can afford to lose. That is, we should not invest or purchase with all that we have. Remember, some people placed everything they own into USTC currency and out of the blue the currency sank to zero. This negatively affected them, and some of them even committed suicide. Moreover, it is not only through a currency collapse that one may lose everything. Millions of dollars can be hacked, including your own. The platform could collapse as happened to FTX a few days ago i.e. - invest the amount of money whose loss will not affect your life.

2. The second rule: Stay away from new currencies or those that are trending You may encounter those who suggest that a certain coin, worth 1 cent, will reach $ 100, or another will exceed $ 300. You will meet many of those people. When this happens, run away from them. This kind of currency was made to defraud and collect the biggest number of dreamers of quick wealth who get themselves into trouble and then the money is just gone.

3. Rule 3: keep an eye on major currencies Keep your eyes on the major currencies, or as they are called the top 10. These currencies have endured lots of ups and downs since they appeared and are still solid, so don't risk investing in currencies that are still not known for their ability to withstand times of turmoil.

4. The fourth rule: diversify your investment Bitcoin may have caught your attention and you may be aspiring to invest all your money in it, but it is wise to diversify your currencies to avoid any possible turmoil in the currency in which you have invested all your money. Diversify among: Bitcoin, Ether, Cardano, Matic...etc.

5. Fifth rule: do not be greedy the reason why many people are losing is that they are greedy. For example, you want to invest 100 dollars to gain 1000 dollars. This is not proper. Let your goal be making a profit at a certain and reasonable percentage. Let's say, you set a goal that the 100 dollars that you invest will make a 25% profit. By the moment they will have reached 125 dollars, then you would have achieved your reasonable and logical goal. The point is, you guarantee that the market turmoil will not wind you down later after those gains.

6. Sixth rule: stop losing one of the conditions for successful investing is that you know when to get out of it. For example, you can't invest 100 dollars while the market is down, the 100 would be plunging to 90. Yet, you are still waiting for it to rebound. Then you find the $100 has become 20$. This is because you haven't specified how much loss should be enough to get you out of the firm.

7. Rule 7: Determine the type of investor are you You should determine what type of investor you are. Are you investing to achieve immediate profit, or are you investing in future profit? Because the two types are completely different in their investment method, manner, and strategy. If an investor wants immediate profits, they must be familiar with all the technical information about trading and its types, etc... But if you invest for future gains, that is another matter.

8. Eighth rule: news, then news You can't be a cryptocurrency investor and not be interested in the news. The thing that moves the market the most is the news. For example, there are currencies, and before their collapse, there were preceded rumors spreading and paving the way for that. News like technical problems in the currency or an issue related to liquidity or its protocol. At that time, you must be ready for any emergency and withdraw your investments before they are lost.

9. The ninth rule: Buy when there are rumors and sell when there is certain news
 For example,
 if there is a widespread rumor saying that there is a certain currency that will be added to when you find that the rumor is starting to spread, this is a good time to buy. As soon as the rumor is proven or denied by an official source specialized in the currency or the platform itself, then it is the selling time as there will be a strong decline after that. 

10. The tenth and final rule: keep your coins in a safe place after figuring out how to choose your currencies correctly and studying your investment properly, it's time to move your coins away from platforms, and keep them in a safe place. And how important it is to keep your currencies in decentralized wallets or cold wallets.

An important question for followers:- 

Do you think that the time of market collapse is the best time to invest and buy assets, or to sell and get rid of them? Why?

I am happy and would love to see your answer and comments on this topic...

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