In the past week we have seen reports of massive bitcoin liquidations.
If you are unfamiliar with the word, “liquidation” In finance, this is when a trader must close out a leveraged position because his margin has run down.
It’s what we call in everyday terms “pleb speak” when someone lends money in order to make a bet about the future of Bitcoin and then loses the amount of money that they borrowed (or even more in some cases).
Remember the following first sentence when trading Bitcoin with leverage:
Fool and his leverage #bitcoin Soon they will be separated.
I will quote one of the teachers that I have. “up 6% today, down 100% tomorrow.”—@aantonop
To quote another, “#notyourkeysnotyourcoins“
Attention! @michaeljburry is right—there’s a lot of hidden leverage in #bitcoin. Caveat emptor.
— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) June 20, 2021
Do not use leverage to invest in bitcoin. (Not financial advice.)
Bitcoin is still highly volatile, even though it has a market capitalization of about $2 trillion. The price of bitcoin fluctuates in response to the news. It’s safer, therefore, to buy bitcoin on the spot and keep it long-term (at least for four years).
It is also important to consider that you should not overexpose yourself to bitcoin, even if you do decide to buy it on the spot markets.
You’re more likely to panic sell bitcoin if it drops quickly if you have a high exposure to it, or are new in the market.
What will tell you if you are overexposed to bitcoin? It’s likely that you’ll start losing sleep and/or investing emotional energy into hoping bitcoin’s value moves in one direction only (up).
This is based on my own experience. It was in the years 2021-2022 that I became overexposed and often got sick. After I reduced my bitcoin exposure, I started to feel better. I was also able think more clearly.
Plan to invest for the long term.
It is almost a guarantee that you will get rekt if you try to make quick money with Bitcoin.
Stay humble and stack your sats. This is the advice that legendary Bitcoiner Matt Odell gave.
The inverse would be to be irresponsible and bet bitcoins irrationally.
Attention!
The article below is an overview of the topic. Take. The opinions expressed by the authors are their own and not those of BTC Inc. or Bitcoin Magazine.
“This article is not financial advice.”
“Always do your own research before making any type of investment.”
“ItsDailyCrypto is not responsible for any activities you perform outside ItsDailyCrypto.”
Source: bitcoinmagazine.com
