Crypto Automated Trading

Meta Down Bad

The rally of the past few days might have reignited your hopes that the Bull market is back. Some of the top 20 coins like Ethereum or Solana have seen 15%+ growth over that period. Are we going back to Up-Only market conditions?

The chart above says otherwise. ‘Wait’, you might be thinking. What does Meta’s, Facebook’s parent company’s, unprecedented 25%, $237bn 1-day crash have to do with Crypto?

The answer is: Even if we put aside Facebook’s lofty metaverse ambitions, surprisingly much.

We always expected that over time, Crypto will start resembling stocks more closely. Less volatility and fewer massive drawdowns or rallies. What we did not expect was Stocks starting to behave like Crypto. Meta’s drop was driven by bad news but also by a lack of liquidity in the market.

Many traders seem to be sitting on the sidelines, waiting to see where markets will go. This is the same as in Crypto markets. Trading Volumes are down 50% from December. Relatively small moves can drive prices up or down significantly.

wise man said that choppy markets destroy your portfolio by giving hope and capitulation at just the wrong times. The moment you believe that a relief rally is the turning point and enter the market, the price reverses and starts dropping. As soon as you give up and sell, markets start going up again. This can eat up your portfolio as you slowly lose hope.

The way to navigate this is to have a clear plan, conviction to hold, capital waiting on the sidelines and slow accumulation of dips.

Act impatiently and you will watch your portfolio bleed.