Two of the major exchanges Coinbase and GDAX both froze when Bitcoin hit $11000 citing “extremely high volume”
Every time there is a spike in prices for Bitcoin or Ether (upwards or downwards), it seems like Coinbase freezes up. They still have not figured out how to deal with the volume of traffic! Coinbase freezing up is potentially costing you money!
Before I explain how this costs you money, you have to understand the basics of market vs limit orders. A market order is buying/selling at the current market price. A limit order is where you specify the exact price where you want to buy/sell. In a limit order your order will only go through if price hits your target. In a market order, it’s going to go through.
Coinbase allows only market orders on their website and app. This is a big disadvantage because you are buying/selling at the current price.
How does this cost you money?
You’re watching the prices and see a sharp dip and think, Buy Buy Buy! You login to the website, it’s frozen. You try the app, it gets hung up. Once the app or website recovers and lets you login, the price has magically recovered from the sudden and sharp dip. And let’s suppose you are able to login during the sharp dip, the dips last a few seconds so the odds are very much against you.
For the most part prices don’t move very fast. In the high volatility period, you can see two sharp dips of over 15%. If you were to try to login to Coinbase and buy on the dip, good luck with that! As I mentioned, the dips are quick. The dip could even be just one seller selling a large amount.
How to buy during that dip?
The answer usually is GDAX.com. GDAX is the sister company to Coinbase. Your Coinbase login will work on GDAX also. There are no fees to move fiat or cryptocurrency between Coinbase and GDAX and vice versa. And why would you want to go through that hassle of moving your money to GDAX? Limit orders!
This would have been great during yesterday’s 20% dip once Coinbase froze due to the high volume of trading after bitcoin surpassed $11,000 for the first time, had GDAX not been frozen as well.
A Quick Trade
As many new exchanges compete for legitimacy there aren’t a ton of options. However Binance.com had no issues, and I was able to sell off Bitcoin (BTC) & Ethereum (ETH) without getting hammered like Coinbase users, and then buy back in once it corrected. Making a quick 10% in less than 24 hours.
Another thing I noticed was that Cardano (ADA) hadn’t given up nearly as much as of it’s weekly gains back to the market percentage wise as some of the cryptocurrencies with larger market caps. It was showing relative strength while the others nearly gave up most of their weekly gains if not more. So I decided to buy in, and today it rallied 24%. I will look to lock in profits over the next 24-48 hours and buy back into Bitcoin (BTC) Ethereum (ETH) or Ripple (XRP) at a discount after pulling profits from Cardano. It looks to still have legs.
Update: December 1st 2017 Cardano responded just like I hoped and was up another 22% this morning. I was able to sell by using coinswitch to exchange my ADA tokens for Bitcoin and had them deposited in my Binance wallet. I will use the Binance Exchange to sell 50% of the Bitcoin bought with the profits from Cardano and buy Ethereum.
After making a quick 45% in less than 48 hours I feel much better about having my money in more stable currencies like BTC & ETH. As soon as I receive a fill on the Ethereum I will then send both BTC & ETH to my Trezor wallet for offline storage and HOLD. Remember, it’s ok to have a little cash on the exchanges for quick trades, but ALWAYS keep the majority of your coins offline stored in a secure wallet like Trezor Wallet or Nano Ledger S. Lastly, NEVER lose your passwords!
For those new to trading- do not try to time the market. This strategy is for the day traders out there who follow technicals and have experience trading. Trying to time any market especially cryptocurrencies can lead to devastating losses.
This is just a small snippet of future use of blockchain technology. We are in the infancy of a technology that has greater potential for revolutionizing technology and making a bigger impact than the coming of the internet in the 90’s. There is a use case for almost every industry, if we posted all the infographics this would be the longest blog post ever.
If you understand and believe in the impact Blockchain Technology could have and the potential for it to revolutionize technology.. don’t freak out about a 20% down day. Use it as an opportunity to cost average down on your favorite coins. The point is, after you’ve done your research and due diligence on the potential for blockchain, and then done the same for the individual companies behind the digital currencies don’t panic sell.
Hold on for a few years and we think you’ll be glad you did. On the other hand, if a 20% down day keeps you up at night and is not in line with your risk tolerance, find another investment that is more suited towards your goals.
There are plenty of mutual funds with 10 year track records and less volatility than cryptocurrency, and there are solid companies that pay dividends.
Cryptocurrency investing is not for the faint of heart, the potential upside can be huge, but with that comes a higher degree of risk. Never invest money you can’t afford to lose.
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