CEX.IO News Education

Trading Tip: Buy Bitcoin When There’s ‘Blood in the Streets’

, November 3, 2014

Although this isn’t an exclusive bitcoin trading strategy, buying any sort of stock, commodity or other asset, when the market seems to be at a level of ultimate despair, can sometimes turn into the perfect trade.

Of course, there are times when the negative view on an asset is warranted, but buying at all-time lows when everyone else believes the bull market is over can sometimes turn into a smart strategy. Sure, if you believe that there are brighter days ahead.

Buying When There’s Blood in the Streets

The idea of buying when everyone else seems to be in an ultimate panic comes from Baron Rothschild, the 18th-century British nobleman. Baron Rothschild is credited as saying,“The time to buy is when there’s blood in the streets.” There are examples where he was proven to follow his own advice, such as the shopping spree he went on during the panic after the Battle of Waterloo. Although the general sentiment that people get from this quote is to buy when everyone else is panicking, the actual quote also mentioned that you should buy “even if the blood is your own.” This is generally referred to as the basis of contrarian investing.

Bitcoin Trading Can Get Emotional

Controlling one’s emotions is one of the most important aspects of trading for a profit, and as we’ve seen in the bitcoin market, not many people have become masters of their own domain. There have been plenty of instances where weak hands either bought because they saw a recent price rise or sold because they thought the end of bitcoin was near.

Before you take this trading tip to heart, it’s important to understand your long-term position on bitcoin. If you’re just trying to make a quick buck, then this strategy may not work for you. There will undoubtedly be more bubbles and crashes in bitcoin in the future, and you have to be prepared to limit your emotional distress during these times. If you’re bullish on bitcoin over the long term, then this trading tip could work for you.

When to Buy Bitcoin

Finding a “blood in the streets” moment in the bitcoin market can be difficult, but it’s not impossible. These moments will usually include a few public figures stating that they are giving up on bitcoin, and there will probably be a few news articles that claim the “end of bitcoin” is near. The key is to find a point in time when everyone who has given up on bitcoin has left the market. Timing this trade can obviously be difficult, but it should still prove to be a valuable option even if you don’t get in at the exact bottom before the bull market starts again.



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