In February 2011, the price of bitcoin rose to $ 1 for the first time. At this level, the coin rate was for a couple of months, until...
In February 2011, the price of bitcoin rose to $ 1 for the first time. At this level, the coin rate was for a couple of months, until April of the same year. Among the early investors who took advantage of this and bought a little-known asset at the time was the former head of the bitcoin.com portal Roger Ver.
It is unknown if he sold the cryptocurrency or is still holding it for long-term purposes. However, buying BTC at $ 1 was probably one of the best investment opportunities in history. Since then, the coin has risen in price by 900,000% and brought in $ 9,000 in income for every dollar invested.
Bitcoin is unlikely to drop in price to $ 1. Today, cryptocurrency has thoroughly entered modern life. The digital asset is used for payments and investments, and its derivatives are traded on the Chicago Stock Exchange. However, the opportunity to buy a coin at this price may still appear. Moreover, similar transactions have already been made, writes RBC Crypto .
For example, in March of this year, the bitcoin rate on the decentralized exchange Binance DEX in a pair with USDS fell from $ 8,800 to $ 101. The trader who managed to predict and catch this decline received 8700% profit per trade or $ 87 for every dollar invested.
The opposite also happens - an abnormal rise in prices. On May 21, the BTC rate, again on Binance DEX, went up several times. In a pair to USDS stablecoin, the coin rose in price to $ 89,899, and the day before - to $ 99,999. However, in this case, the user's profit was not as impressive as in the previous one - just under 1000%.
Binance DEX is a small exchange with low trading volume. But similar anomalies with the price of bitcoin occurred on large exchanges. For example, in December on Binance, the rate of the first cryptocurrency in a pair against USDS fell more than 11 times, from $ 7,000 to almost $ 600. In total, up to 8 BTC were sold at this level. The profit was over 1000%.
Similar falls in this pair were repeated later, in February 2020. Then the price of bitcoin, also in relation to USDS, dropped several times to $ 9,300-9600 with a market value above $ 10,000. After that, Binance removed the pair of BTC / USDS and BNB / USDS, and there were also shots in it. And recently, June 24, 2020, the company held a final delistling steyblkoina USDS.
In May of the previous year, a sudden collapse of the quotes of the first cryptocurrency happened on one of the oldest American exchanges, Kraken. The BTC rate against the Canadian dollar momentarily fell from $ 11,200 to $ 101. The user managed to buy the cryptocurrency 99.1% cheaper than the market value, thus earning $ 110 profit from every dollar.
The first instant drop in the price of bitcoin significantly below the market level happened in June 2011. Then the cryptocurrency was worth $ 17. But on the now defunct Mt. Gox rate dropped to 1 cent. How many coins were sold at such a cost is now impossible to see. But the one who managed to catch this decline was able to increase capital 1700 times at a time, receiving $ 1700 in income for every dollar invested.
Probably the largest abnormal decline in bitcoin price occurred in August last year on the Bitmax exchange, as described by Davi Wan, managing partner of Primitive Venture. Then the price of the asset decreased from $ 10,100 to $ 0.3, at this level 48 BTC were sold. The profit amounted to more than 3.36 million percent or $ 33.6 thousand per one invested USD.
Other cryptocurrencies
Bitcoin is not the only cryptocurrency that has experienced abnormal ups and downs. For example, on March 13, 2020 on Binance DEX, the Litecoin rate dropped to $ 1. However, the market value of the coin did not drop below $ 24 that day. This fall brought the trader 2300% profit or $ 23 per 1 USD.
On June 25, 2020, again on Binance DEX, the BNB token price fell more than 99%. In an instant, it collapsed from $ 16 to $ 0.07. The user who caught this movement received about 23,000% in one operation or $ 220 profit for every dollar invested.
The opposite happened with the Litecoin cryptocurrency in the spring of 2019. Its rate on the Binance exchange, paired with the PAX stablecoin, skyrocketed from $ 80 to $ 99,997. The trader who sold the coin at this price earned $ 1240 for every dollar, the profit margin was more than 124,000%.
In 2017, a multiple instant drop in the price of Ethereum happened on the GDAX exchange, now operating under the name Coinbase Pro. Then an unknown large investor sold over 96 thousand ETH with one order. As a result, the altcoin price instantly collapsed from $ 317 to $ 0.10, the incident was filmed by user Patrick Lorio. The trader was fortunate enough to buy the cryptocurrency for less than it ever was worth, as the all-time low is set at $ 0.42. Thus, the profit from the transaction amounted to more than 310,000%, or about $ 3100 dollars for one invested.
The Chinese exchange Bkex brought even more income to the user. On it, in August 2019, the XRP token rate briefly rose from $ 0.3 to $ 5463, which Davi Wang also reported. The profit from this transaction exceeded 1.8 million%, each dollar invested turned into $ 18 thousand.
Perhaps the biggest gift to an unknown trader came from the Chainlink token (Link). On March 12, 2020, its price on the Binance exchange fell from $ 2.2 to a minimum value of $ 0.0001. How many coins were bought at this price is unknown. But we can say that in this transaction, the user exchanged each dollar invested for $ 22,000, and the profit margin reached 2.2 million percent.
Why is this happening
There are many reasons for abnormal highs and lows in asset prices. One of them may be a common user error . For example, if a trader indicated a too low price when selling cryptocurrency. Or vice versa - when buying, if we are talking about abnormal growth.
Another reason could be a trading bot crash . Let's say if a text error in his program tells the bot system to sell or buy cryptocurrency at the wrong price. Also, the system mechanism may break due to overloading the exchange. This can also lead to the previously mentioned user error. Let's say if, due to the slow operation of the trading platform, he tries to buy bitcoin by accidentally opening any other trading pair.
An unpredictable reason can also be a deviation in the market price of the underlying asset . For example, consider the BTC / USDS pair. USDS is a stablecoin, the rate of which should always be equal to one dollar, both on each individual exchange and on the market. However, this parity can be violated.
This happened on April 19-20, 2020. Then the market rate of stablecoin, according to the aggregator Coinmarketcap, fell to from $ 1 to $ 0.7. This happened due to the fact that the price of USDS on the small Bittrex exchange decreased by 30-50%. As a result, this was reflected in the average value across trading floors. If on that day any trader used data from Coinmarketcap to set up a bot, he could enter into erroneous, unprofitable trades due to the distortion of the USDS market rate.
In all cases, the size of the deal will be an important factor . The downward trajectory of the price will happen only if the volume of sell coins exceeds the volume of buy orders in the order book. Conversely, if a user places an order to buy 100 BTC at $ 9000, and there is only 60 BTC in the order book for sale at this level, then the remaining coins will be purchased at an overvalued rate. Because of this, the lumbago can also be caused by the use of a market order . When using such applications, only the number of coins / currency is indicated, but not a specific value.
How to prepare for a lumbago
Shooting occurs extremely rarely. On well-known exchanges, the number of abnormal fluctuations can be limited to hundreds or even tens of times over many years. At the same time, it is impossible to have time to buy the much cheaper cryptocurrency. Trading bots are enabled on the platforms. If they see an opportunity to conclude a profitable deal, for example, pay $ 600 instead of $ 7000 for Bitcoin, they will do it instantly and faster than any trader.
Therefore, it is necessary to prepare in advance for catching lumbago and place orders where an abnormal deviation may occur. To do this, you should pay attention to the following factors:
Liquidity . On the one hand, shooting is possible only when a large number of coins are sold. Therefore, it is important to target popular cryptocurrencies such as Bitcoin and Ethereum. Most transactions take place with them in the digital asset market.
On the other hand, a lumbago is possible only if there are few orders from other traders in the order book. And this, on the contrary, is inherent in little-known cryptocurrencies. Therefore, it would be ideal to find a popular coin on the marketplace with a low number of orders to buy or sell.
Couple . The previous point may seem strange. However, there is a solution - these are pairs with unpopular stablecoins. Most trading with all cryptocurrencies is done using USDT. At the same time, there are few transactions in pairs to other stablecoins, for example, USDS, TUSD, BUSD, PAX. Therefore, it is more efficient to place orders in anticipation of a lumbago there.
Exchange . You can increase the chances of catching a lumbago thanks to the competent selection of the exchange. And there are subtleties here. It is more efficient to choose a small floor, as it is likely to have low trading volume and order book liquidity. For example, on Binance DEX, the first order to buy bitcoin paired with USDS is often much cheaper than the market rate. This means that any deal to sell BTC in any amount will cause a backlash.
But using small exchanges can also lead to a loss of capital. The main source of income for sites is trading. If their volume is low, then the company receives little profit, and there is a risk of bankruptcy.
Therefore, it is most effective to choose new platforms that have not yet gained popularity, launched by large companies, or decentralized exchanges. These are Binance DEX, Poloni DEX and others.
Placing orders . Success largely depends on where to place the order. Here you also need to find a middle ground between two conflicting points. The lower the price at which you place the order, the higher the potential profit. But it also lessens the chances of the "lumbago" reaching your buy request. The higher the order is placed, the higher the probability, but the lower the possible profit.
The optimal solution would be to place a buy order not lower than a large cluster of orders from other traders. For example, if there are many orders in the order book at the current price of $ 9000, there is an empty space below, and the next orders are located at $ 3000, then it would be most efficient to place an order above $ 3000. If you place it lower, the potential will be greater, but there is a risk that the gap will hit a group of orders for $ 3000, and the price will not reach yours.
The number of orders . As mentioned earlier, shots are extremely rare. To increase the chances of catching such one, you can divide the capital into parts and place many orders where an abnormal rise or fall of the price is possible. However, in this case, the volume of each individual application will be small, and consequently, the potential will be lower. Therefore, perhaps the best solution would be to place several large orders in pairs with popular cryptocurrencies and unpopular stablecoins. For example, in May on Binance, the bitcoin rate in relation to BUSD momentarily dropped to $ 6,000 at a market price of $ 8,700.
Difficulties and risks
Despite the fact that the pursuit of lumbago does not seem to be a painstaking business, it is not at all so. There are many risks and nuances here, the observance of which will not only help to increase the result, but also protect against loss of funds.
First, the placement of orders based on the shooting requires control . If you placed a request to buy bitcoin at $ 1000 on a small exchange, you can be sure that tomorrow there will be a similar request at the $ 1000.01 mark. And this can affect any pair with any cryptocurrency. There are users on the market who stubbornly hunt for lumbago, every day rechecking and rearranging orders by a cent is more profitable than those of competitors.
This raises a second problem: you can be wrong . For example, when specifying a price when placing an order, add an extra zero or put a non-comma in that place. Or choose the wrong form and, when placing an order to buy BTC for $ 100, accidentally sell it at this price. Therefore, it is extremely important to carefully double-check the completed fields. If you order the order to be executed, it will no longer be possible to cancel it. Either the coins will be sold at an unfavorable rate to another user, or they will be instantly bought by a trading bot.
Third, there are limitations . After the bitcoin rate on the Binance exchange fell to $ 600 in a pair against USDS, it became impossible to place an order at such a low level. The exchange has introduced restrictions, and now you can place an order to buy or sell an asset at a price that differs from the current one by no more than 5 times. Other sites could have taken similar measures.
Fourthly, automatic order cancellation is enabled on some platforms . For example, on Binance DEX, orders for the purchase and sale of assets are removed by the system once in a certain period of time. Because of this, you have to constantly set orders again, that is, you will not be able to issue one and forget it for years.
Fifthly, the exchange can roll back transactions . Often, the rules for using the trading platform indicate that it reserves the right to cancel part of the operations if it considers that they occurred as a result of a failure, hacker attack or for other reasons. For example, in February Poloniex canceled and erased 12 minutes of trading from its history. The company blamed an error in order execution as the reason.
Sixth, it is risky to place orders counting on an abnormal drop in pairs for all cryptocurrencies in a row. There is a risk that the price of any coin will fall many times by itself, without lumbago. If so, you are likely to buy an asset with dubious prospects .
Summary
Catching one abnormal fall can literally change your life. For example, if you manage to buy bitcoin for $ 1, briefly return to 2011. But such phenomena are rare and often go unnoticed by users. In other words, even if you chase lumbago for a year, there is no guarantee that it will lead to success.
Therefore, it is important to maximize your chances. That is, to choose an exchange where such shots occur frequently. Place an order in a pair where an abnormal decline or rise is most likely to occur. Make sure that none of the competitors overlap your application with theirs. Be patient and carefully monitor what you specify when buying or selling cryptocurrency. Otherwise, making a mistake in the pursuit of a lumbago, you can become its cause.
