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If you own cryptocurrency, you need to read this:
Earlier this week, Bitcoin experienced a flash crash down to $8,900.
In this week's newsletter, we'll detail what happened, how it happened, and how to protect yourself from this type of market manipulation in the future.
Bitcoin Plummets to $8,900 (on BitMEX)
On Monday, Bitcoin experienced a brief but dramatic drop to $8,900 on BitMEX due to large sell orders totaling $55.49 million. This flash crash was short-lived, with prices quickly recovering back to $67,000.
While it's not often we hear of flash crashes, but it does happen.
However, this flash crash wasn't caused by a technical difficulty or a poorly planned exit strategy. This flash crash was pure market manipulation.
As a cryptocurrency investor, it's important to know that market manipulation happens on a large scale within the cryptocurrency space. Market manipulation most often affects small capitalized projects, but as we have just seen, it can also happen to Bitcoin.
Although these types of flash crashes only last for a fraction of a second, the news and headlines often unnecessarly promote market fear.
What happened and how can you protect yourself (or even benefit from this in the future)?
Flash Crash Market Manipulation
This type of market manipulation is often orchestrated by a number of whales who decide to dump a large value of Bitcoin onto a small exchange.
This results in crashing the market on the exchange, allowing these whales to then re-purchase Bitcoin back at a much lower price.
By overwhelming a smaller exchange by dumping their Bitcoin, it draws out the liquidity and drops the price.
The price drop triggers a domino effect where people who have stop losses in place (sell orders in place so they don'ts lose too much) get triggered, selling their position. As the price continues to drop from $60,000, to $50,000, to $40,000, further stop loses will be triggered, further reducing the price, all this happening within a fraction of a second.
These same whales (and their friends) who dumped their Bitcoins onto the market and crashed the market will also have buy orders placed at $30,000, $40,000, and $50,000 which will then automatically purchase new Bitcoins at a huge discount.
Unfortunatly, when one exchange experiences a flash crash, there is a tendency for this cause a bit of a ripple effect, cascading a decrease in price across all the other Bitcoin exchanges.
How to Protect Yourself:
The best way to protect yourself from this type of market manipulation is not to use any open stop-loss orders. Even better, do not store your cryptocurrency on an exchange, rather store is in a cold storage device like a hardware wallet.
Converserly, if you would like to attempt to benefit from such market manipulation, you could always have an open buy order at a much lower price in an attempt to catch the flash cash if it happens again.
Alternatively, adopting a 'buy and hold strategy' when investing into fundamentally sound cryptocurrency projects for the longer-term is the strategy we support at Altcoin Investor.
Buy and hold is straightforward. Identify a project, make the investment and then sit tight. This eliminates the need to constantly watch the markets or react to every price fluctuation, which can be both stressful and time-consuming.
If you would like to know what we are including in our 'buy and hold strategy', consider becoming a member.
Join Us - As We Prep for The Crypto Run-Up
The price of Bitcoin is now sitting above the $65k mark and while this may sound like a lot of money for a single Bitcoin, we believe this is just the beginning of what will become one of the biggest growth opportunities we have seen in the crypto space for at least the last four years.
If you haven't already started diversifying your portfolio with crypto, it's still not too late. Now is an excellent time to enter the market while prices remain relatively low.
If you want to know what we are buying, you are welcome to join us as we share our monthly Altcoin picks in anticipation of the upcoming bull run - Become a member to gain access.
Richard.
Top 100 Trending Altcoins
This is the second week in a row where the crypto market is in the red.
Today's Crypto Fear & Greed Index
Today's Crypto Fear and Greed Index = GREED –> Decreased to 75 (from 81 last week).
Bitcoin & Ethereum Price Movement
Bitcoin decreased 3.5% in the last week, currently trading at $65,601. In the previous 90 days, Bitcoin has increased by 65.3%.
Ethereum decreased 6.9% in the last week, currently trading at $3,373. In the previous 90 days, Ethereum has increased by 52.4%.
Global cryptocurrency market capitalization has decreased to $2.49T (from $2.55T last week).
Top 100 Gainers - Last 7 Days
Over the last 7 days, the biggest gainers (within the top 100):
Ondo (ONDO) +46% - Ranked #92
Ondo Finance (ONDO) is a DeFi project aiming to merge decentralized and traditional finance by offering structured financial products and liquidity solutions. It caters to various risk appetites with high-risk/high-reward and low-risk/stable return options, aiming to make DeFi services accessible to a wider audience. Ondo seeks to bring Wall Street-like financial sophistication to the blockchain, offering a range of services like asset management and yield generation.
Fantom (FTM) +40.7% - Ranked #41
Fantom (FTM) is a blockchain platform that stands out for its unique approach to scalability and efficiency, using a bespoke consensus mechanism called Lachesis and a Directed Acyclic Graph (DAG) structure. This setup enables near-instant transaction confirmations and high throughput, making Fantom an attractive option for developers and users seeking fast, secure, and low-cost transactions. It supports smart contracts and is compatible with the Ethereum Virtual Machine (EVM), allowing for easy porting of Ethereum dApps and fostering a growing ecosystem of applications across various sectors.
Stacks (STX) +23.2% - Ranked #25
Stacks (STX) is a unique cryptocurrency project designed to bring smart contracts and decentralized applications (dApps) to Bitcoin, which by itself lacks these capabilities due to its original design focused on security and simplicity. Stacks operates on the principle of enabling more complex operations and functionalities on top of Bitcoin's secure and proven blockchain without altering its core. It introduces a novel consensus mechanism that leverages Bitcoin's security by anchoring to its blockchain, thus enabling developers to create dApps and smart contracts that inherit Bitcoin's robust security features while providing more versatility. Stacks represent a significant step towards enhancing the utility of Bitcoin, making it not just a store of value but also a foundational layer for building a more expansive and functional decentralized internet.
Sui (SUI) +22.8% - Ranked #98
Sui (SUI) is a cutting-edge blockchain platform developed by Mysten Labs, aimed at revolutionizing the way decentralized applications (dApps) are built and interacted with. It distinguishes itself through high scalability, rapid transaction processing, and an innovative object-centric approach, allowing for more efficient and flexible management of blockchain assets.
With its unique consensus mechanism and developer-friendly tools, Sui is designed to address common blockchain issues like scalability and user experience. This platform represents a promising advancement for the blockchain sector, potentially supporting a wide range of applications that require high performance, from gaming to financial services.
Biggest Micro-Cap Gainers in the last 30 days
We review and analyze small and micro market cap cryptos weekly, looking for the next low-cap gem. These are the best-performing (quality) micro-cap projects over the last 30 days:
Best Performing Quality Micro Caps (Last 30 days)
- LIME +1,634% - iMe Messenger & Crypto Wallet (Micro-Cap)
- GPU +1,496% - AI Node Reseller (Micro-Cap)
- MPT +919% - Web3 eSports Tournaments (Micro-Cap)
Meme Coins:
Meme Coins, are cryptocurrencies inspired by internet memes, humor, and or online communities. Overall the meme coin sector has continued to perform well this week.
However, as fun and novel as these projects may be, the majority of meme coins have no intrinsic value and often suffer from pump-and-dump schemes. While we don't recommend investing in these types of coins, it is always interesting to watch this sector perform in a bull market.
Top Performing Meme Coins
Meme coins continue to soar, even in this downtrending market. Again this week, Taylor Swift's Cat takes the prize for the largest gains of over 43,150% in the last 30 days.
James Anderson
Monthly Altcoin Pick
We will be releasing the April Altcoin Pick in two weeks.
If you would like access to this and future monthly Altcoin picks, consider becoming a member - It's only the price of a few cups of coffee a month.
Altcoin picks are emailed to members as soon as they are published. If you are wondering how we choose our monthly Altcoin Picks, this is the methodology we use.
Our Altcoin Picks for the prior months can be found here.
Thanks and appreciation to all our members!
Until the next report,
Richard.
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