A bitcoin (BTC) in danger?

On this Wednesday, August 31, 2022, bitcoin continues its descent into hell. The $20,000 is finding it increasingly difficult to preserve it and the macroeconomic situation does not seem to be improving. The bull-trap scenario is increasingly confirmed. Despite everything, bitcoin takes almost 2% today and ETH more than 4%. I will therefore support in this article my point of view of the market while presenting techniques for winning over the long term in the world of cryptoassets and investment in general. Excellent reading!

A strong downtrend

On the 4-hour time unit, there is a majority of sellers who control the market.

Being long here makes more sense to me in the long term than actually for a reversal in the trend in the short term. It looks like a range to regain momentum before resuming the underlying trend. Always preferred stop for your future positions with leverage.

A majority of investors at a loss

Bitcoin investors realize a total of $220 million a day in net losses. For a long-term spot investment, it is in these zones and in this “cold” atmosphere that one wishes to invest.


On a relative scale, this figure is quite modest, especially compared to recent multi-billion dollar capitulations.

The bear market of 2022 continues and still wreaks havoc. This highlights the strong downtrend we are in.

Investor psychology remains distinctly poor due to an unfavorable macroeconomic context and liquidations that do not seem to be stopping. Given the current remarkably low active user base, it can be considered impressive that the $20,000 level has held so far.

DCA as a long-term investment

To avoid being at a loss for too long, a strategy is often put in the spotlight, the DCA (Dollar Cost Averaging). This consists of diluting the purchase price of an asset through regular intervals to build up a position. This is one of the most powerful and easiest investment strategies for individual investors. Recurring purchases by fixed sums (or DCA) allow you to:

  • Build up a position over time, even if you don’t have a large sum of money to invest.
  • Don’t have to worry about market volatility and watch your charts every day.

Example of DCA on the S&P500

The SP500 is the stock market index that tracks the 500 largest publicly traded companies in the United States. One of the most followed indices to realize the current state of the market. With an annualized rate of return of around 6% over the last 80 years, you really can’t go wrong with betting on the SP500.

Sure, the stock market has its ups and downs, but if you stick with it long enough, the numbers go up and in the right direction.

But how has this strategy performed over time?

To answer this question, we need to clarify our investment strategy:

  • We invest a fixed amount of $500.
  • We do this on the first day of every month.
  • Let’s say you started using this strategy in 2012. We want to know three things:
  1. Performance of the periodic purchases strategy on the SP500 since 2012.
  2. The total amount of money you have deployed on this position is $64,000. You entered at the average price of 2,567 on the index.
  3. Your total return in 2022 is 65%, which translates to a net profit of over $40,000.

It’s not so bad. But as you can see, the return on this strategy is not a straight line up either.

Two lessons to be drawn from this:

Investing involves risk. There is no magic strategy that is a winner every time.
Panic selling is not a good strategy, the SP500 has recovered. Time in market is more important than market timing.

This is why other DCA techniques can be considered. In particular based on indicator:

  • Buy when the fear and greed index is below 20%;
  • Buy on MM pullback (Moving Average 150 or 200).
  • Buy after a decline of more than 70%

Thus, with these techniques, you will have fewer purchases, because the conditions are rare, but it will offer you very sought after and often beneficial entry points in the long term. More information on the DCA in This article.

That’s it for today’s article. I tried to cover as many points as possible and focus more on the traditional market that guides cryptos. Talking about altcoins here makes much less sense than a macro analysis for me.

Finally, I receive multiple questions asking me on which site I analyze my values. Personally, and for many years, I have been using TradingView, an intuitive interface with a lot of tools and a wide choice of assets. It is clearly the most developed and used interface on the market.

This is the end of this analysis, do not hesitate to give me feedback on my Twitter account @0xakina. Don’t be too greedy, take profits regularly, have a good money management for your trades and rely on your initial plan. Only invest what you can afford to lose as long as it doesn’t affect your morale too much. Have a good week everyone, and I’ll see you next week for a new analysis!

Receive a digest of news in the world of cryptocurrencies by subscribing to our new service of newsletter daily and weekly so you don’t miss any of the essential Tremplin.io!

Similar Posts