Today, we’re discussing some basic terminologies, some FAQs, and the most asked question from everyone. Can you invest too much money in Crypto?
If you invest too much money into crypto or one individual asset (coin), you will become emotionally attached; this amount is different for everyone as everyone is in a different situation.
The problem with investing “too much”, is that emotion comes into your investing and this plays a large factor in how you trade, for example, you will take your profit too early or sell your coin at a loss because it has dipped below your entry price.
Keeping a level head and trusting your TA, research, and consistency is the best way to trade.
What is arbitrage?
Arbitrage is the practice of taking advantage of small differences in the price of a coin within two exchanges, this would let traders quickly lock in small profits from the transfer of the coin. Arbitrage is a low-risk trade, but also a low % return trade. The differences in price between exchanges come from the lag time it takes for all exchanges to adjust to the constantly fluctuating coin price. However, due to transaction fees in some exchanges, an arbitrage trade is not always efficient.
Example
On Kucoin 1 $COTI is trading at $0.41 and on Binance it is trading at $0.395, this can be an arbitrage opportunity as if someone is holding large amounts of $COTI then they can transfer their $COTI from Binance to Kucoin. Even though the change will be 1.01% if someone holds £5000 of $COTI they can make £50 off just transferring from one exchange to another
USDT or BTC, what’s the difference?
The term “SATS” used in crypto is used as a shortcut for defining the value of a coin that is paired against BTC.
SATS is short for “Satoshis” named after the creator of Bitcoin Satoshi Nakamoto.
E.G CHR/BTC
CHR is currently @0.00000608BTC per coin
This can be written as 608 SATS instead.
Trading a coin against BTC and USDT makes no difference to your investment, it simply dictates what currency you are using to purchase the coin.
The coin is still the same price, goes up at the same rate, and can be sold for USDT or BTC.
When looking at the /BTC pair for a coin you may think it is losing value, however, this is not always the case, and vice versa.
/BTC just reflects which asset outperforms the other
Example
COTI is up 10% but BTC is up 20%,
The COTI/BTC pair would be down 10%,
But the value of COTI has increased.
This is because the /BTC pair looks at the price in ‘sats’ (parts of a Bitcoin), and the value of 1 sat changes with the value of BTC.
What is HODL?
HODL is a term created from a misspelling of “hold” that refers to buy-and-hold strategies in the context of bitcoin and other cryptocurrencies.
HODLers are crypto investors who buy and hold their positions regardless of price. Whether the market is up, down, or sideways, these folks stay invested, and confident in the long-term value of crypto.
Example
In the last 24 hours, $AKRO has gone up 13%.
In the last 1 year, $AKRO has gone up 5580.8%
Here we can see the massive difference between holding for one year and holding for one day, many cryptocurrencies are best when you HODL. However, every person has a different trading strategy.
