- Data suggests that Bitcoin is embarking on an accumulation phase
- This means that sellers are making way for buyers and a new cycle has started
- How can you make the most of this period in Bitcon’s cycle?
There is strong evidence to suggest that Bitcoin is entering the ‘accumulation’ stage of its cycle, which means that the bulk of the selling is done and that buyers are stepping in to load up before the next move. This is the time when whales add to their bags, which is therefore the time when you should be doing the same thing. Buying the quiet and selling the noise, perhaps months or even years later, requires patience, but there are serious advantages to this strategy which platforms like crypto Twitter do their best to beat out of you. This guide reminds you why this minimalist approach is the best for 90% of Bitcoin enthusiasts out there.
Don’t Have to Time the Bottom
Buying the bottom is great in theory, and is something that many of us look back and wish we’d had the hindsight to do. The reality however is very different. With a slow, steady bottoming it is impossible to spot the bottom at the time, and it is only in hindsight, when price has raced clear, that we can identify it. With a fast crash, as in November 2018 and March 2020, it takes bravery to buy up bitcoin when there is absolute fear in the market, which is why most people stay out of the market, missing the bottom.
Steady bitcoin accumulation means you don’t have to bother about waiting for the perfect opportunity. Yes you could be underwater for a bit, but when you’re thinking long term this really doesn’t matter, and it’s far less stressful.
Less Chart Watching
Steady bitcoin accumulation also means you are not a slave to the charts. If you’re a short term trader then your life is spent watching the moves of the crypto market and trying to stay one step ahead. This, though, is harder than it sounds – various estimates put the success rate at 10-20% for day traders.
Steady accumulation of bitcoin means that you just add to your stack when the opportunity arises, taking note of the price at your time of purchase for tax reasons. Other than that, nothing more than a couple of alerts at key points of interest is all you need to do, as long as you have confidence in Bitcoin in the long term.
Fewer Trades=Fewer Mistakes
There is a famous saying: the devil makes work for idle thumbs. This is true in trading, where impatience can ruin you. When all you’re doing is buying, with a view to selling as close to the market top as you can (and, no, you’re not going to hit the exact top either, so stop obsessing over it), you are dramatically reducing the number of trades you make.
This is beneficial for a number of reasons. Firstly, it makes your tax reporting easier; second, it reduces the amount you lose to trading fees; and third, it limits the amount of mistakes you can make. Every trade you make carries risk with it, but if you’re accumulating bitcoin during the end of a bear market or in a bull market then you can be fairly confident that, over time, you will do much better just holding what you buy than trying to trade it up to a higher amount.