Retail Crypto Likes Losing Money During A Bull Market

It doesn’t matter what Bitcoin does, there’s no reason why you should get liquidated on a 5% drop

Dear Reader👐

👉Nothing would suck more than losing your entire portfolio during a bull market. Unfortunately, this is the fate awaiting most retail traders at the moment.

It’s been a thrilling week after Bitcoin touched new all time highs. More upside is expected and it will definitely happen.

But if there’s a time that crypto trading was most risky, it’s now. This is not the time to join the hopium party.

The brightest indicator that retail is approaching a minefield is the rising funding rates in the futures market.

This newsletter is free!💯

➡️Funding Rates

Funding rate is a difficult data point to wrap your mind around, but it’s important cuz it may have a big impact on your profits and losses.

During a bull market, funding rates increase as more people take up leverage to enter long positions. Typically, longs pay funding to shorts, as is the case now.

So, when trading with high leverage, you may suffer losses and get liquidated even with the slightest change in prices.

Coindesk reported Bitcoin’s average funding rates touched 0.06% across exchanges when it made new all time highs.

This is the highest rate recorded in at least six months, according to data provided by Bybit.

Bitcoin’s funding rate oscillates around 0.01% most times. So, when they say 0.06% is high, it’s actually very high. Such a high reading often paves the way for price pullbacks.

🌟Flash Crash

➡️Ever heard of a Flash crash? Liquidity hunt? Ah, excellent choice! The end of the Bull Market it is!

Bitcoin flash crashed to 8200 within a span of a minute on Binance US.

You can imagine the pain felt by the over-leveraged longs. This simply meant instant liquidation on any open position that didn’t have a stop loss.

With such glitches becoming commonplace during massive price rallies, risk management can’t be stressed enough.

➡️Euphoria

Yeah, the pictures of Lamborghinis and watches are back on Twitter. But we are still pretty far from what euphoria looks like in this market.

Every other Alt in the top 5 has not realized half of the gains expected during a bull market.

At the end of 2017, coins in the top 5 like ETH had pumped a hundred times that year.

As such, it would be insane to tell anyone to take whatever profit they’ve made and wait for the market to cool off.

📊Remember it’s Uptober and everything goes up in Uptober.

The important thing is to do your own due diligence before you hop on any moonshot coin that you think is about to explode.

---

Disclaimer

This post is for informational purposes only and should not be taken as financial advice. Any purchase of financial products should be done at your own discretion.