Bitcoin Flash Crash

Recently there was a flash crash in the crypto market. After BTC hit an all time high of about 69,000 USDT per Bitcoin, it slowly dropped but remained at a consistent level for some time. I was doing homework and camping at a lower level for Chainlink (LINK) during the all time high. I already bought Filecoin (FIL) earlier and was hodling.

I had bought LINK at an average price of about 30.50 USDT per coin and sold at 32, thinking it would drop back. However it did not and went up to as high as 38, which was around BTC’s all time high. To be honest I thought I had missed the train and was holding back myself everyday from FOMO’ing (fear of missing out). At this time I just want to get back LINK at 32, but I was not seeing any much hope. So I set a queue at 33, just 1 USDT above my selling price, which I thought was something I could accept.

It dropped to 33 later on and I got the first batch. Thinking it was a good opportunity I put in another queue at 32 USDT, which I got it very soon after. The issue came after that. Bitcoin slid down to the 55k levels and as it did so it dragged down LINK and FIL, together with all the other alt coins of course. I chose to buy LINK and FIL because I did homework on it and decided it was good. LINK appealed to me as I thought the fundamentals were good. FIL was due to the technicals. I did not analyse too deep with all the wedges and the candlesticks. To me it was very simple. I just looked at FIL’s all time high of 240, and felt buying at approximately 60 was a good bargain.

As BTC dipped further, I bought 1000 UDST worth of Polkadot (DOT) futures at 3x leverage and at a price of 40. DOT was something which one of my friends had analysed and I felt it was relatively good too, having just briefing researched into it. DOT earned me a bit of money for a while but I did not sell it. Not because I was greedy, but because I wanted to hodl onto the good trades. People always hodl to bad trades but quickly cleared off good trades. But good things do not last long and soon I went into the negative.

Although BTC slid to 55k, at this point in time my research showed that the whales were buying and moving Bitcoins out of exchanges. That was a sign that selling pressure was low and the whales were keeping their Bitcoins in cold storage. When looking at the crypto market, I used Bitcoin as a general reference because the market usually moves in tandem to Bitcoin. I was quite confident though. But the charts were showing otherwise. Despite all the facts, crypto keep dropping.

One thing I noticed though, was that Ethereum (ETH) was holding up well, staying at the 4200s level despite Bitcoin’s slow drop. Among all the coins I would say it is among the top performing ones. I did further research into it, although I knew it was already a good coin. My research was to find out why it remained consistently high despite the market trend. I liked what I found and decided to queue 1000 USDT for ETH futures at 4x leverage at 4000 USDT per coin.

When I bought ETH I was already starting to FUD (fear, uncertainly, doubt). Despite my homework done, the market is not going as planned. My emotions were stating to get to me. But I told myself that emotions should not get into the way of facts and my homework. Although we should be adaptive, I knew what I was going through was pure emotions.

I got my ETH futures soon after, but now it was the flash crash. BTC dropped below 42000 and ETH dropped all the way to 3200. I was almost liquidated. At 4x leverage, I had prepared for a 25% drop, and the 20% drop nearly killed me. Looking back, it was a mixture of luck and my cautiousness which I survived. I had played crypto futures before at 5x, 10x, 20x. As of now, 5x is the maximum I am willing to go. Had I played at a higher leverage and chased after ETH at a higher price, I will be most certainly be wiped out from the market.

Either way, now my LINK, FIL, DOT futures were losing money. ETH was near breakeven point and to be honest, one of my better trades. FOMO emotions were creeping in deeper into me, and I started to have the impulse to just sell off. But still I told myself that I must hold on. Believe in the homework I had done and the plan I made while being clear-headed.

Of course at this point in time one may feel I did not do well, which I certainly agree. My clear-headed decision saw me buying FIL at an average price of 62.50 and LINK at an average of 32.50. DOT was also losing 33% of its value at that time, which equalled to 100% loss as I was doing 3x futures. DOT had enough money buffer to tank the crash, and subsequently I put in 1000 USDT more to ETH as buffer margin. By now I had already spent 5000 USDT on spot FIL and 7000 USDT on spot LINK, 1000 USDT each on DOT and ETH.

Yet one could not predict the future. If time were to restart all over and I had the exact same information as I had then, chances are I will make the same decision. We do not have the power of hindsight, so I could only ask myself, at that time and with the information I had, was I satisfied with my decision? Did I do my homework properly?

I do admit that DOT and FIL was not something I was prepared to hold long term. I did not have the conviction as I had when I bought LINK and ETH. It was something I took to mind, that next time when I trade I must buy only coins which I have conviction in and ready to hodl long term. My friend did advise me to at least dump my futures for they are more dangerous, and my emotions were telling me to do so.

But I wanted to believe in my homework and my decision. As of now I am still hodling on. The crypto market has already shown some signs of revival, but to be realistic it is too early to tell anything. Time will tell if I am right.

But whatever it is, this article aims to share the fact that despite our best efforts, shit happens. At that time, emotions will run amok and we will lose the ability to think properly. At this time, it is best to remember the plan you set when you are clear headed, and to do your research properly. Add the conviction and confidence in your homework (supported by proof and facts of course) and you will be able to survive through it well, unless you are totally wrong in your research conclusion. Of course, if you play futures, do remember to set enough buffer money to tank through a flash crash, and not to play too big. If not, even if in the longer term you are correct, the flash crash will wipe you out before you can get there.

Do your homework properly, and be confident in your plan made in a calm state of mind. Losing your emotions in the market will mean certain ‘death’ in your trades.

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