Hackernoon logo3 Investment Mistakes Often Made During Altcoin Season by@tran-hung

3 Investment Mistakes Often Made During Altcoin Season

Tran Hung Hacker Noon profile picture

@tran-hungTran Hung


We are seeing a huge amount of money pouring into the crypto market over the past few weeks. Especially a huge amount of gold investors is flowing into the blockchain market in hopes of gaining huge profits from this potential market.

For many traders we have heard a lot over the last few weeks about the Altcoin season or #Altseason. However, there are a few mistakes that some traders can make and I hope this article will point out a few common mistakes that help new traders entering the crypto market can consult and trade more effectively.

First of all, let's find out when the altcoin season appeared

If we follow the previous Altcoin season, the first signs of an upcoming Altseason will begin with Bitcoin's spike in price. Usually a new amount of money will be poured into the crypto market (either from hedge funds or retail investors) via Bitcoin. Due to the easiest liquidity, a large amount of BTC will be traded. It will push the bitcoin price to a new high (or All-time-high ATH).

After the amount of money injected slowing down, the money flow started to switch to "Big" altcoins and then to "Small" altcoins. A clear technical sign of Altseason starting is the BTC Dominance rate will begin to decline. During this movement time, there will be opportunities for the market makes it's self-adjusting , which can be deep corrections happening and new investors will usually get mistakes at this stage.

What are these mistakes?

1. Buy high sell low

This is the biggest mistake a trader can make. Seeing a strong upward sign in Bitcoin's price, traders will start move their fund into Bitcoin or Altcoins. But when they see signs of a correction they start to panic and sell at a lower price than what price they bought. This loss will go into the pockets of experienced investors and they will be the final winner of the game. To avoid this mistake one trick is to refer to the history of market corrections.

For strong growth, there could be the corrections up to 50% in the short term. Remember, this is essential for a sustainable market growth.

2. Fund rotation between too many coins

This is another mistake that new investors entering the market can make. When they see an Altcoin A growing strongly they are willing to sell the coin they are holding B to buy coin A. A few days later when they come back, coin A initially made a profit of X2 or X3 already. Because buying coin B at the top they only reaped a small amount of profit. Then they continued to sell coin B to buy coin C. In the end, the profit was negligible. Moreover, they also spend a lot of time on this continuous trading. One effective strategy to fix that is:

Keep the coin you see potential and sell it at the profit you 

. At #Altseason, you can easily get X2 or X3 if you found the right coin.

3. Use too much leverage in trading

Using leverage is a good tool to increase profits. However, it can also make the novice investor lose money during this #Atlcoin season. When the Atlseason comes we will see a rapid rise in price and the speed of correction will also be very strong and unexpected.

All predictions and analysis may not be correct to make the right decision. For example, when an investor sees the price of bitcoin rising 3 consecutive cycles to $ 41,000 they can think of the price of btc going up and use leverage to buy more.

But the sudden market correction to $ 31,000 will cause the lost of investors who buy (Long) orders. To overcome this situation, we should consider using leverage when it is reasonable and quickly exit when the expected profit is reached.

In Conclusion

The crypto market is considered a relatively high risk market. Prices fluctuate strongly during Atlcoin Season. New investors need to avoid getting into market from FOMO or FUD, or investing more than what they have.

Please remember only invest at a level of risk you can accept. There are also other sustainable investment forms that are applicable to all weather of the market such as using Arbitrage Trading or lending to make regular profits.

Disclaimer: The contents of this article are the opinion of the author alone and do not reflect the opinions of Hacker Noon as a whole. Nothing in this article constitutes professional investment advice. Please do your own research before making any trades.


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