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Chris Tubby: How I trade the cryptocurrency market


I have traded Bitcoin and a few other favourite cryptocurrencies for several years. Partly because trading is my passion, and I am open to trade anything as long as I understand the dangers.

Another reason is because I train individuals to trade ANY asset class and the only way to do that is to have substantial trading experience across all asset classes.

2020 was an amazing year for BTC and it finished very strongly indeed. However, I expect in 2021 crypto and digital assets will come of age and be accepted by regulators and the professional trading community. This does not mean I think it will go to the moon; however, it is becoming more correlated to other asset classes and the economy.

Bitcoin is an amazing ambassador for cryptocurrencies

Bitcoin has been an amazing ambassador for cryptocurrencies and although I believe there is more to come, my main interest is the growth of the whole digital asset class, especially securitised tokens. The only limitations for these will be exchanges and their product managers’ imaginations!

As regulators increase oversight, they will provide the credibility cryptocurrencies require. Securitised tokens have the advantage of having an asset assigned to the token, so the underlying asset is tangible rather than theoretical. As the underlying value of the asset changes so too will the value of the token. The asset could be a bar of gold, a portfolio of art, real-estate, or mimic traditional markets such as oil, agriculture, or financial instruments such as equities or an equity index…anything!

The fact that there is an underlying asset will bring in more traditional and larger investors, banks, funds, individuals, and traders. Many institutions have been prevented trading crypto or digital assets so far due to their risk department refusing to allocate capital or limits.

I see the biggest issue with cryptocurrencies at the moment to be liquidity. There are so many exchanges that the liquidity is thinly spread around between them… over 500 crypto exchanges (200 in the start-up period) and around 19,000 markets for pairs, altcoins and stablecoins. The fact that it is possible for practically anyone to buy and white label an exchange is part of the problem.

Ideally exchanges should merge until we have the choice of possibly 10! By doing so it would consolidate liquidity, create deep order books, reduce volatility, and attract more acceptance all round.

How I trade cryptocurrencies

I trade crypto differently to other asset classes. First, it is pretty much a long only trade, unless you understand the finer nuances of trading and crypto. The set of ‘coins’ I buy are because I have researched the coins and their uses. When the market rallies, I hold to them until I sense the market is top heavy, then I sell. However, I only sell out 50 percent of my longs, just in case one of them is the next BTC! If it is, I am still holding half of my long position.

If I am right and the market goes lower, I wait until I feel it is bottoming out, either from studying the market or by using technical analysis and buy back the coins I sold…plus more using the profit I made from the previous trades. This way I continue to increase my portfolio without outlaying more capital!

The issue for most traders of crypto is in a bear trending market. Buyers tend to then consider the coins an investment and simply hold on to them until the value increases again, rather than selling them out and buying them back at a lower price. Of course, shorting crypto can be expensive to finance, unlike other assets on traditional exchanges where buyers and sellers trade with equal margins and have the ability to short sell (unless banned!).

My final thought is that I believe the majority of central banks will have created their own digital currency before the end of this decade…if not sooner!

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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