They misunderstood the market and placed a bet that BTC price would go down, instead of rallying, which turned out to be the case. Over 887,000 options traders had to liquidate $1.2 billion worth of BTC in July, 92% of which were short positions. Likewise, crypto options trading - betting the price will long or short can place you in a bind as well. This could be exceedingly addictive and leave you with depleted funds far beyond the measly $50 you leveraged. However, if the price goes down since your entry, you would have to continually top the funds in order to avoid margin calls and in the hopes the price will go up. If the crypto goes up, you can set up an automated Take Profit (TP) order at a certain percentage. Therefore, if you margin trade $50 times 300, you enter the market at $15k. Such an active trading strategy can lead to overnight riches, but also to the crippling of emotions.įor instance, depending on the exchange of your choice, you can leverage your market entry by up to 300X. Sitting on an asset with great expectations is one thing, but betting on its specific price move is another altogether. The latter is especially egregious since diversifying one’s portfolio is the staple of stock trading since its invention. On top of the volatility, we also have external factors that affect even top assets like bitcoin.Ĭlearly, misunderstanding the market, FUD (Fear, Uncertainty, Doubt), and putting hopes into a single asset are rookie mistakes.
Hard forks are also quite common, ethereum classic from ethereum and bitcoin cash from bitcoin, to name a few. This is how dogecoin emerged onto the scene, over the weekend, according to its creators Palmer and Markus.
#I use emotion for the many and reserve reason for the few code#
After all, code can be copied, tweaked, and launched under a new name. This can lead to price volatility, on top of the crypto market’s general volatility. Outside of major assets, cryptocurrencies often have small market caps, and often the developers themselves are either anonymous or pseudonymous. Even the top cryptocurrencies are volatile The same applies to crypto trading as well. This is due to a few key reasons: low liquidity, lack of information, and small market capitalization. It is a well-known fact that penny stocks pose an investment risk. Even the top cryptocurrencies are volatile.
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