All in History

Crowd behaviour at highs and lows and what the 5% do instead when trading Crypto

The term “bubble” is used anytime an asset’s price is driven, by speculation, far away from its intrinsic value.

In the last twenty years, we’ve had an unprecedented number of bubbles. Tech stocks in 2000. Real estate in 2006, Debt in 2007, Bonds in 2013 and Bitcoin in 2017.

Maybe it’s a new technology or a more efficient service, perhaps it’s a scheme where, if successful, it could change your life, but whatever it is, and whatever it does, the behaviour is always the same.

Are cryptocurrencies immune from the Power Law?

The majority of market participants spend their time reading about how the latest and greatest upgrade to an existing blockchain is going to change the game, or they read the opinions of cryptocurrency gurus, following them on social media, reading the tweets and posts for the one thing they are looking for. Certainty.

Unfortunately, certainty does not exist in any market, including the cryptocurrency space. In financial markets, venture capital, and macro economics, there is one law to rule them all.

Trading cryptocurrencies can look easy, but tripwires are hidden in plain site.

Not so long ago, it was possible to trade with 400:1 margin, and if you think that sounds like a lot, it is.

Depositing $10,000 in an account with 400:1 margin would allow you to control a $4,000,000 position. And of course, it also means a small move of 0.50% against your trade in the underlying market would wipe out your account — and a lot more.