Over the past week, we’ve seen some turmoil in the crypto markets. Bitcoin is down 12% since Monday. And many altcoins are down more.
If you’re new to crypto, this pullback might freak you out. But Daily editor Teeka Tiwari says it’s simply the nature of this volatile asset class.
On Friday, Teeka sent an update to our subscribers and explained what’s really behind the current bout of volatility. (Palm Beach Letter subscribers can watch it right here.)
Basically, it comes down to leverage…
According to Teeka, there are a lot of crypto traders still using massive amounts of leverage (i.e., borrowed money) to speculate on the price of bitcoin.
When smart traders see this, they bet against it.
These overleveraged traders are getting their positions liquidated… And that’s putting downward pressure on bitcoin (and altcoins).
Here’s Teeka:
This is just another day in crypto. Dumb people do dumb things. And using 40-1, 80-1, or 100-1 leverage to go long on an asset that can move 20–30% in a day is dumb. It’s dumber than two rocks in a sock.
And thank goodness that they do this because it gives us opportunities to take advantage of their stupidity.
If you’re a smart trader, and you see there are a bunch of leveraged longs getting liquidated, do you go in there and just aggressively buy their liquidations? No. You step back your bid and let the liquidations hit the market… Then you start buying on the cheap.
Those of us who are playing the long-term trend in crypto… We get to benefit from it. We get to dollar-cost average. We get to buy in cheap on these lunatics who are using crazy leverage.
Right now, Teeka suggests using this short-term pullback to position yourself in projects solving real-world problems. They’ll take off when the rally ultimately resumes.
One tiny subsector he’s following will benefit from a new trend we’re watching: the development of a digital dollar.
You see, the Federal Reserve recently launched a program that could lead to a mandatory recall on the U.S. dollar.
Teeka believes this program could replace the dollar with a new digital version that will be radically different from what you have in your bank account right now.
And he’s put together a briefing to explain what this new digital dollar regime means for you and your money… including the name of a crypto project also set to profit from its rollout.
He’ll also show you the one move you must make when your bank tells you they’re moving all your cash into this new digital dollar. You can watch it for free right here.
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Regards,
Chaka Ferguson
Editorial Director, Palm Beach Daily