Apparently, the sideways market broke down not out. Are we in a "now what" situation? Or do you think this is as far down as it goes? Even the week chart looks bad for BTC. Any suggestions what to do?

That's an interesting way of viewing the current situation. Yup, I can clearly see how the USD price is going up, and it's particularly beneficial for freelancers paid in USD like me, so I keep track. And because I'm getting more than what I was expecting from projects I accepted weeks ago, I am planning to use the excess to buy crypto. I bet other people like me have the same idea too. So this makes sense.

I learned something new today. Thought I should share it here for those who, like me, are into trading and still haven’t gone past the basics.

It’s about the difference between SHORT SELLING and MARGIN TRADING.

The reason I came across these terms is that I was wondering how some traders are making a profit in a bearish market. I heard about short selling and I kind of understand how it works now, but then I came across another term—margin trading—which has a few things in common with short selling.

To those of you who don’t know what short selling is, it’s basically selling securities or cryptocurrencies when the price is high and buying them back when the price falls. You make a profit from the change.

But isn’t that how trading generally works—sell high, buy low? Yes, but that’s different. In short selling, you don’t own the securities or cryptocurrencies you are selling. You borrow them from a broker. This means that you can literally sell something you don’t have in your wallet. The broker lends you the asset, you sell it, buy it back, and then return it to the broker.

Margin trading, on the other hand, is similar to short selling in that you also borrow from a broker. But you’re not borrowing securities or cryptocurrencies to sell and buy back when the price drops. Instead, you are borrowing money to buy securities or cryptocurrencies to sell when the price rises.

When you short sell something, the broker usually only expects you to return what you owe them. When you do margin trading, you pay interest for the amount you owe.

Margin trading allows you to make LONG POSITIONS (traditional trading approach), while short-selling allows you to make (you guessed it) SHORT POSITIONS.

Short selling is riskier than margin trading because your potential loss is bigger (even unlimited in some cases, as most assets tend to appreciate). And the only way to close your short position is to buy back what you sold. If the price stays above your selling price, you’ll lose.

BTW, you won’t earn much by short selling during a bear market. You can earn bigtime by short selling before the bear market even starts. Please let me know if I got it right. I might be talking gibberish and not helping. TIA

Thailand's move to exempt crypto transfers through government-approved exchanges is pretty interesting.

The government's goal is to promote cryptocurrency trade on authorized exchanges (approved and regulated by SEC).

However, this is just temporary. The tax exemption will eventually stop on Dec. 31, 2023.

I see what's happening here...

They fail to encourage traders to prefer authorized exchanges since there are cheaper alternatives. The problem is digital asset operators see this as an opportunity to provide services outside the government's surveillance and control.

It's a good thing because:

1. Government already fully acknowledges crypto trading. No more resistance.
2. They want to create a more secure environment for crypto investors. Better security = Higher confidence = More investors.
3. They don't want to control the blockchain--they can't. They only want to regulate transactions to protect investors from losing money. Of course, they want the government to make a little bit of profit, too. (As long as that profit--tax--benefits the people, that's fine)

Overall, this is good for the crypto space.

The crypto market isn't essentially or intrinsically affected by the situations of other financial markets. The reason it is being dragged along is that many investors trade on multiple markets (together with many other factors). They usually move assets here and there but sometimes, they scrape off multiple assets into their pockets all at once. Some of them treat their crypto assets as a lifejacket, which keeps them afloat when the rest of their assets are sinking. Dependence on crypto usually entails increased sell-offs.

Just when we thought things are starting to quiet down and getting ready to swing back, the Federal Reserve announces that they will raise interest rates and tighten their monetary policy to combat inflation, landing another strong blow on the already beaten financial market. And we're likely to see more interest rate increases in the future until they bring inflation under control. One expert says that if economies don't hold up amid these hikes, Bitcoin's price might plunge further to about 70% of its current price, which is around $8000.

But of course, the Fed is careful not to trigger a full-scale recession that will take years to reverse so they'll jack up rates slowly to allow economies to grow simultaneously. Aggressive hikes are out of the question. Raising interest rates helps slow down the economy. When the economy reaches a point tolerable for both consumers and providers, it will start increasing its pace again. This will hopefully prevent any unwanted trends in the crypto market.

But like every bear market we've faced in the past, this situation is temporary. No matter how low Bitcoin's price goes from here, it will recover. That's because the only significant issue big investors have with Bitcoin and crypto, in general, is that they are, in the words of ECB chief Christine Lagarde, "worth nothing." And this can be solved by creating an ecosystem where people get used to using cryptocurrencies for transactions and are confident they will hold their value, which can be achieved with additional technological advances.

If there's one thing humans are good at, it's creating technological advances. And if there's one thing that won't slow down or stop from advancing anytime soon, it's technology. So we are heading that way no matter what.

Couldn't agree more. But it's also a fact that DCA is for position traders (those who prefer long positions). Definitely not for scalpers, day traders, and swing traders. But ultimately, it's not the technique that would cause you to lose more but taking risks you can't manage and spending more than you can afford. 

Dollar-Cost Averaging (DCA) is a classic investment strategy in which you divide up the total amount you'd like to invest in a particular asset across periodic purchases. You don't care if the price goes up or down; you just buy at regular intervals.

Let's say you have $10,000 you'd like to invest in BTC. Instead of making one lump-sum investment, you spread your purchases across a certain period, say 10 months. This means that every month you will buy $1000 worth of BTC regardless of the price.

What does this do?

1. It helps reduce the impact of volatility (because you won't get tempted to invest more than $10,000 when you see dips). In other words, you avoid the risk of making counter-productive decisions out of fear or greed, such as panic-buying or panic-selling.

2. You may not notice it from your short-term investment activity, but if you zoom out and look at the big picture, you'll see that you have more exposure to dips when you dollar-cost average than when you track for a dip.

3. Let's face it, tracking for a dip is time-consuming and stressful. You could use the time you spend poring over news and charts to manage your other income sources.

However, this strategy only works if the price is generally going up. Like any other strategy, it won't work in a bearish market that has no hope of breaking out.

But at least this way:

1. Your total loss will be smaller.

2. You only lose a portion of the fund you initially intended to invest because you didn't add more in the process.

3. Recovering your losses is also easier if the market is bound to recover.

4. The amount you intended to invest is most likely just a portion of your wealth you can afford to lose, which means you can also afford to wait it out until the market recovers (and not resort to capitulation).

This could have saved or eased the suffering of those who lost their entire life savings on assets that crashed in the recent bear.

I agree with you, especially on the "great depression type crashes not happening." I mean, we've been through that several times. If no one has learned a lesson, we're doomed as a species. But, we can't deny that even crashes not as severe devastates smaller investors. Hope all the markets recover quickly so we can get on with our lives.

If one or two of the big whales decide to capitulate because they see an opportunity elsewhere, it will definitely break down. So yes, we never know what's going to happen. I can see that governments and big financial institutions cashing in on crypto or have their own holdings have an influence on the price movement. Since they are always in the news, most investors are tuned in to their stories. It seems like the next trend will take place once any of them make a drastic move.

Despite the low confidence in the price action lately, we are seeing a sideways market.

A sideways market is when the price moves horizontally, rising and falling but not breaking out or down. It indicates indecisiveness or consolidation, which could create a turning point. The question is in which direction will the price action go? Well, we can only hope it breaks out and starts a new trend, but it can still go down.

The only good thing about a sideways market is that the price action between support and resistance is more predictable, so it's a good time to scalp. However, during a period of indecisiveness, you should trust fundamental indicators more than technical indicators, as anxious investors often turn their attention toward macroeconomic factors. This way, you can better anticipate breakouts.

I'm not a financial adviser so take my words with a pinch of salt. But, these are general facts most traders already know of. Yes, there's money for you even in a choppy but only if you play your cards right. Trade, not gamble.

We've been told to buy when the price is low and sell when the price is high. This is pretty much the thumb rule in trading.

But that is not without conditions. It isn't absolute. It doesn't always guarantee profit.

Let us not forget the RISK. And risk correlates with volatility. High volatility means high risk. And since the crypto market is a volatile market, the risk is higher here than in the stock or FX market.

So, the "buy=low, sell=high" strategy only works when you successfully manage the risk.

You can do that by:

1. Investing less than 5% of your total portfolio in crypto
2. Prioritizing other aspects of your finances ahead of investing in crypto
       - emergency fund
       - retirement savings
       - high-interest debt payment

In other words, invest only what you can afford to lose.

To sum it up--"Buy when the price is low and sell when the price is high, BUT invest only what you can afford to lose."

It may not guarantee a profit but it can help cut down loss when the bear attacks.

Three things stuck in my mind this week:

1. It might take a few more months before BTC's price finally exits the bear market. That is if we have a similar situation to the 2018 bear market where fear and greed levels plateaued for a whole year.

2. BTC's price free-fall will slow down between $24K and $27K unless more macroeconomic and geopolitical risks emerge.

3. Short-term holders are responsible for most of the capitulation (day trading and scalping don't fall in this category, right?).

But one thing has a high certainty---the bear market is temporary.

The bull is not a matter of if but when.

I learned a new word today--STAGFLATION.

It's the state of the economy in which growth is slow and unemployment is high while at the same time prices are rising.

STAGNANT ECONOMY + INFLATION.

Many countries, including the US, are currently struggling with this situation.

Cause: Uncertainty.

Many people, not just the low-earners, choose to temporarily cut down on their spending because they are bracing for another economic downturn. They are uncertain about the future of their employment or business, so they prefer holding on to what little funds they have.

Economic downturns are often associated with political performance. They are almost always pinned on the government, or at least the politicians currently in power.

As trust in the political system drops, so does trust in the financial system.  

People then look for an alternative. One that offers more security in times of crisis. Bitcoin.

Not only is Bitcoin digital (and therefore compatible with the digital economy, which we all know to be "the future"), but it's also scarce and traded through a blockchain (which is free from the controls of the financial system that people currently distrust).

Warren Buffet recently made a strong declaration that he wouldn't buy all of the bitcoin in the world for $25, and it gave us a better glimpse of how he really views cryptocurrency. He went on to say that Bitcoin "doesn't multiply" and "doesn't produce anything," which is true if you think about it, except what multiplies in BTC is its value. I wonder what would make Buffet change his perception of BTC. Or maybe he's just trying to influence the crypto market for a bargain buy.

QUESTION: When the US Securities and Exchange Commission said recently that they plan to "police cryptocurrency exchanges and coin offerings, as well as monitor NFTs, decentralized finance platforms, and stablecoins," what exactly do they mean by that? And to what extent can they have control over the crypto market?

Sanctions put pressure on Putin, but were not strong enough to force him to back down. Russia has had first-hand experience with sanctions when they invaded Crimea, so they were expecting this and took it into account. What would have made Putin stop was a treaty with NATO but that's a bit too late now, is it? If the US doesn't have any ill intentions against Russia, then it's very easy for them to say "no, we're not going to make Ukraine an ally" because Ukraine doesn't qualify anyway. And since it's a treaty, the US could have made counter demands like "they would only agree if Russia promises never to invade any country again." But they didn't, proving all of Putin's claims in the face of the world. Yet the rest of the world decided to join the US in sanctioning Russia anyway, which they've never done when the US invaded Afghanistan for a fabricated claim. But Russia will survive the sanction and the countries that sanctioned it will be the true losers of this war because they've lost a lot but didn't gain anything. Ukraine is still gripped by war.   

I think if you're going to start a war in this era, you'll have to be able to look at least 5 years into the future. Putin isn't stupid. He and his cronies knew this would happen and get worse over time. If they were afraid of the effects of these sanctions, they would have backed down from the get-go and tried a different approach. But they didn't, so they must have prepared for the worst. Also, they already had a taste of other countries' sanctions when they invaded Crimea so this isn't news to them. I wouldn't be surprised if releasing a digital coin has been considered in their plan, but I don't think that's going to happen anytime soon.

With oil prices skyrocketing, Russia is recovering faster than they are losing, which is one of the reasons we see ruble bouncing back. Once this war is over, the true losers of this war are the countries and private multinational companies that participated (or were forced to participate) in the sanction, because they lost a lot but didn't gain anything from it.

As for Russia, they might not be able to take over Ukraine completely, but they will have managed to topple down its government and cripple any plan of the US to put up nukes in their backyard. Russia is now using gold to evade the impact of the sanctions so there are more ways for Russia to survive than there are to murder its economy. They still hold a lot of aces to resort to having a DC. With Binance hopping on the sanction bandwagon, anything digital isn't appealing for those people. If it is and they've already made steps into its creation, it would still be centralized.

It depends on how you treat it. But now that the world is slowly embracing Bitcoin as a form of currency, it's starting to look more like a currency, and I believe that's the idea, as far as the whitepaper is concerned. Treating it as both will not hurt though so no issue there. Just hold on to your coins if you treat them as an asset because if there's one thing with high certainty in the crypto world, it's that Bitcoin's value will keep increasing as more countries open their doors for crypto.

I think Bitcoin, itself, can't be hacked. I mean how would hacking Bitcoin benefit anyone really? Its value depends mainly on investors. I think what you are referring to is the blockchain, or storage devices, or maybe the company running Bitcoin. Well, all of those can be hacked alright, although the blockchain is almost impossible to hack because it's growing by the millisecond (every time someone makes a transaction) and there are contracts to sign here and there. You will need hundreds of supercomputers to at least replicate it, but why invest in those machines if you can simply invest in Bitcoin and gain 10x more profit (this is probably why no one has dared after all these years)?

Maybe the hacker reached a dead-end and realized there are more walls to break before they can actually benefit from their loot. We can only speculate. But whatever their reason, at least it helped reveal the security flaws that could cost investors' their life savings. We're lucky to have lived during the budding stage of cryptocurrency but not so lucky that we have to deal with so many risks.