Over the last week, we have seen reports of enormous Bitcoin liquidations.
For those who are not familiar with the term “liquidation” as it applies to finance, it refers to when a merchant is forced to close a trade with leverage because the margin for trade has been exhausted.
In terms of everyday Pleb, it is when someone borrows money to bet on the direction of the price of Bitcoin and they are wrong, with consequent loss of money they have put for trade (or more, in some cases).
When it comes to exchange bitcoin with lever, I keep in mind the first line from the post below:
A fool and his exploited #bitcoin They are soon separated.
To mention one of my teachers, “6% growth today, down 100% tomorrow”.@Aantonop
To mention another, “#notyourkeysnototyoucins“
Be careful out there. @michaeljburry It’s right: there is a lot of lever hidden #bitcoin. Empty warning.
– Caitlin Long 🔑⚡️🟠(@Caitlinlong_) June 20, 2021
Therefore, the number one lesson for investments in Bitcoin is not to do it with the lever. (Not financial advice.)
Even now that Bitcoin has a market capitalization of about $ 2 trillions, it is still a highly volatile resource. Its price floats in particular in response to the news. For this reason, it is much safer to buy only a little bitcoin on the commercial market and keep it in the long term (at least four years).
Furthermore, when and if you choose to buy some bitcoin in the spot market, consider remaining underestimated to Bitcoin instead of overexposed by it (those terms are subjective; performers as you want).
When you are overexposed on Bitcoin or if you are new on the market and you have gone on Bitcoin, it is more likely to be sold by panic if its short -term price tanks.
How will you know if you are overexposed? You will probably start losing sleep on it and/or investing emotional energy in hoping that Bitcoin price moves in a certain direction (only up).
I share this based on the experience. I was overexposed on Bitcoin in 2021-2022 and I often felt bad for this. Once my exhibition is reduced, I felt better and I was able to think more clearly.
Find an investment threshold you feel comfortable with and, once again, plan to keep for the long range.
Mirating to become rich quickly with Bitcoin is almost a safe recipe to make you rekt.
Take slowly and listen to the wise advice of the legendary bitcoiner Matt Odell: Star Umile, Stack Sat.
(The reverse of this wise advice would be: I am irrational, they amounted irresponsibly on Bitcoin.)
Be careful out there.
This article is a Take. The opinions expressed are entirely those of the author and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.