As you probably noticed, yesterday there was a significant correction in the crypto markets. This was mainly due to certain media outlets releasing news that all South Korean exchanges were being raided by the government. This has recently been demystified and labeled FUD, but in any case, it caused the market to drop rapidly for a few hours.
While watching my holdings and trying to find the best opportunity to profit on the inevitable upswing that would follow after this FUD was over and FOMO set back in, I taught my friend the importance of liquidity and now I'll share that with you:
My friend was texting me and calling me asking me all kinds of questions about crypto. I told him not to worry and to HODL his position - "don't get fudded out" were my exact words.
After 20 minutes of convincing, he calmed himself and then began to ask me how to best make a profit when the market starts trending upward. I told him to buy these dips and just wait for the inevitable upward trend. There was a problem however, my friend is not cash liquid.
What do I mean by being "cash liquid" or having "liquidity"? These phrases refer to the idea of having assets, securities, etc. that are easy to buy and sell for other assets, securities, etc.
Being liquid means that you're quickly able to convert your existing holdings into new holdings very quickly. My friend has 20% of his net worth in crypto, some money in real estate, a very small amount in his savings account, and the rest in the stock market.
Other than his crypto holdings, his investments would be classified as illiquid. He wanted to buy into crypto with more USD, but was unable to quickly sell an investment and transfer the money.
Don't be in the position of my friend. Invest with liquidity in mind. All great investors and businessmen know the importance of being liquid and having readily available money in any circumstance.
Now that you know why you should be liquid, here's the advice I gave to my friend of how I do it:
I invest in income-producing assets - and not just a few income-producing assets - I invest in a wide variety of income-producing assets.
Having all these different assets creates a cashflow that is very very liquid. If I need to quickly move money into crypto or into any other potential investment, I can easily access the income from my other investments to do so.
Liquidity is a simple practice, but something that a lot of aspiring investors, like my friend, tend to overlook. Yesterday's dip in crypto allowed me to go discount shopping on a few of my favorite cryptos, I listed them below.
What I Invested in Yesterday
I figured that there may be a few of you who are curious as to what I invested in last night while the market was in full-on FUD, so here's a little chart of what I bought: (please remember that this is not investment or financial advice and is for entertainment purposes only):
| Crypto | % of Last Night's Allocation |
|---|---|
| STEEM @ $4 | 30% |
| LTC @ $210 | 30% |
| XVG @ $.15 | 10% |
| BTC @ $13k | 30% |
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This is a good idea, I really want to put some more fiat in right now, but I feel like I invested most of what I should be risking. One thing I think is overlooked is the ability to buy bitUSD on bitshares exchange, I feel like this is a great way to secure profits after a moon and have some liquid asset ready for these drops. I'm just lucky I was in ETH and VEN haha so this FUD hasn't hurt me too bad
Well played being in ETH!! I agree, Using bitUSD can be a great way to stash some profits after a moon!
I am always atleast 30% cash all the times for times like yesterday to buy the dip.
That's very smart of you! I hope you made some good profits on last night's dip!
Yes i did. I us those funds for quick trading. In and out in less than a day.
i have 10%cash last night by the way thanks for informing us
Thanks for reading! Glad that you could be liquid enough to hopefully invest in some crypto at a nice discount!
yes bro following you to gain information from you thanks
@khaleelkazi Do you think the growth trend will continue until the end of this week? Thank you!
I'm not entirely sure about this week, as nobody can predict the markets but I do expect some movement mainly in LTC and STEEM - that's not financial advice and just my opinion :)
Yes, I understand that you need to rely only on yourself in financial matters. I think this is a promising pair, what are you talking about. Thanks again for the direction)
You are right on with your liquidity advice! It allows someone to move fast when an opportunity strikes!
I moved some liquid assets to Ether and BTC taking advantage of the dip.
Great advice and thanks for your transparency on what you did! Seems quite wise to me!
I moved to some BTC and more Steem (on Bittrex and may move it here because I don't think we will see it this cheap again!).
nice information.i like this post
thanks for sharing
Very nice post
nice sir, by the way sir do.
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I really like this post.....
Very nice buys at the dip @khaleelkazi!! I especially like the XVG at .15 with the Wraith protocol and steem at 4, as we just saw it above 8 not too long ago!! I was in the same boat as your friend.. rather illiquid and was curious what some good income-producing assets to take a look at would be??
Respect @conradsuperb
wow, great information...
i have 10% cash...
thanks for nice information
I actually keep a small amount of money readily available to buy the dips in the market.. it is not the most efficient method, but it means that I always have a small amount to play around with during the dips in the market - this has worked very well for me so far, but I would love to know what everyone else does in order to do well from the inevitable dips!
I think I did same mistake like ur friend and I was out of liquid last night couldnt do anything because of downward and now just hodling with some ex-coins...
Missed out on the drop and it was pretty quick recovery. Was hoping it was like the China event we had a few months back where it took a few days to recover but not this time. I definitely have to start saving some liquidity and be ready for the next crypto dip. Curious what you hold with stable value as liquidity in the crypto world? SBD is still high and there is Tether but scared one day Tether drops to nothing as there have been a lot stories identifying the phisness behind Tether. Thanks.
Just HODL on this one. Nothing liquid at the moment!
Been loading up on steem. Haven't bought btc for a while since the transaction fees went nuts. Would love to buy more but I am fully invested at the moment.
I invested at a wide range of prices- now I feel stuck waiting for the market to go back up enough to feel like I made a decent return.
Anyways, good tip. I don’t have the ability to diversify that much right now. But when I do, I’ll certainly make sure that I don’t get stuck like your friend.
It's very important to always be liquid because an opportunity might present itself and you grab and run. Well I was a little liquid, however I buy into coins that still very low so I bought some SHND, Digibyte, DFS and Doge. Can't tell what proportion though.
I was quite concerned about the South Korea story and I actually believed it was real.. Thanks for telling us it was actually a flop.
I already invested into wabi before the FUD and I will hodl
that's a great advice, i myself didn't have enough money to buy cryptos unfortunately
Thanks for reminding us if we can't go liquid we miss the discount sales. For the past 18 years I let my wife handle finance. This is not liquid. My accounts in America are closed and I only have bank accounts in South Korea. The first thing I'm doing when I visit Chicago in the summer is to open a bank account. I have been an expat too long.