Red Light, Green Light, Go
The basic rule of Wall Street also applies to crypto
There’s an old saying about making money that some people attribute to John D. Rockefeller and others say goes back to Baron Rothschild. “You buy when there is blood in the streets, even if it is yours.”
Probably, they both said it.
The quote is a bit dramatic, of course, but the sentiment is correct. When it comes to investing, red days are days for buying. Green days are days for selling.
This tactic plays out on Wall Street all the time. Watch enough CNBC or FOX Business and you’ll hear hedge fund managers and banking experts say over and over that they like to pick up well-researched assets when the stock prices fall. Falling prices create opportunities. Conversely, these same folks like to exit positions when prices rise—because that’s where the money is made.
Profit lies in the gap.
As I mentioned before in other posts, the world of cryptocurrency is even more speculative than the game played five days a week on Wall Street. For one thing, the crypto market is global, and never shuts. That means even one 24 hour period can be subject to wild swings—like hitting an all time high in the morning followed by a 5% percent pullback in the afternoon. That scenario played out this week.
Investing like this means adopting a whole new way of thinking. There is no opening or closing bell, there are no “after hours”. Crypto goes. And goes. And goes.
We’re just over a decade into this stuff, and people are still getting a feel for it. The assets are all just now stretching their legs. Imagine where they will be in twenty years. Or fifty.
Aren’t you glad you’re in this world now? You’re early.
Still, the basic rule of Wall Street has direct application. Red days (or hours) in crypto are for buying. Green days (or hours) are for selling (and… holding). Additionally, when a large portion of investors are bullish (Prices are going up! We’re all going to get rich beyond belief!), that is the time for you to grow bearish (This market is too hot, time to sell to some of these schmucks).
While you wait to make either move, you’re studying the market and keeping your eye on investments that interest you. You’re doing your research. And you’re keeping your emotions in check.
Crypto whales (those who hold millions and sometimes billions of dollars in a particular currency) apply this thinking all the time. They wait for investors to get a) scared or b) greedy, and they act accordingly.
They pounce.
To be clear, its not easy to do this. It’s contrarian, and goes against what the crowd believes. Sometimes, it means being the lone voice of dissent. That’s hard.
But you’re not here to do easy things. You’re here to do hard things.
You’re here to make money when the others don’t, can’t, or won’t. This is about you, not everyone else. You’re here for your future, and you don’t live in the moment. You live in the space where opportunity lies and the profit is made. Gaps are your best friend.
Red light, green light, go.
The Crypto Connection is for entertainment purposes only and is not meant to be financial advice. Please do you own research before investing in any asset class. Sara Celi is not a financial advisor, and holds several cryptocurrencies. To purchase her books on Amazon, please click here.