The Effect of an Uptrend

Contrarily, it’s also far easier to increase your USD in an uptrend than it is in a downtrend. This is because during an uptrend, the majority of the market’s movements are higher which allow for ample opportunity to buy lower and sell your BTC holdings at a higher price.

 

However, do know that it can be quite tough to increase your BTC during an uptrend — especially if the uptrend is quite strong. If you are not comfortable with losing BTC realized or unrealized, then try to keep your holdings balanced. Instead, if you believe that there is a decent chance that an uptrend could begin — you could alter your portfolio such that 50-75% of your holdings are in BTC and keep the rest of USD in reserve.

 

The drawback to the safer strategy detailed above is that you will not make as much BTC from a downtrend, but simply put if you are not actively buying and selling BTC during an uptrend it will be tough to increase your BTC during a downtrend.

 

Now that you know how uptrends can operate, take a look below at the common characteristics of a strong vs weak uptrend. Knowing if/when an uptrend is likely to continue is a skill that will help you immensely. The below holds true across all timeframes.

 

Strong Uptrend (likely to continue)

  1. Consistent upward moves with little to no consolidation
  2. Any moves lower are quickly met with price rising higher (this will likely show as a price wick low or a V-shaped reversal)
  3. Ascending triangle formation with rising lows and flat or rising highs
  4. Can be violent and seemingly appear out of nowhere
  5. Volume higher on candlesticks where price moves higher, volume lower on candlesticks where price moves lower

 

Weak Uptrend (unlikely to continue)

  1. Inconsistent, choppy moves higher
  2. Moves higher are quickly met with pullback and moves back lower
  3. Lows failing to hold and lack of enthusiasm from buyers
  4. Obvious slow-moving upmoves
  5. Volume lower on candlesticks where price moves higher, volume higher on candlesticks where price moves lower

 

Now that you know how to read strong vs weak uptrends, what does the chart below look like to you? A likely continuation of the uptrend or will it turn into a downtrend?

 

The white arrow below denotes where the last picture was taken from. As you can see, the uptrend continued. in the beginning choppier stages of the uptrend, you will notice that volume was incredibly high on the buyer side (green volume) and quite inconsequential on the seller side (red volume).

 

Finally, there are two main methods that you can use to increase your capital during an uptrend.

The first method tends to perform better in the short-term and especially well during an uptrend that you believe will continue moving higher.

The second method tends to perform better in the longer-term and will help you increase your USD.

 

Method 1: Fixed BTC investment. After you buy, keep your BTC fixed as price rises while allowing your extra BTC to fluctuate. For example, if you have 3 BTC long and want to keep it that way but you also had generated 0.5 BTC on a market correction lower then you can use that extra 0.5 BTC to generate you more BTC by selling and attempting to buy back more than 0.5 BTC at lower prices.

 

Method 2: HODL. In a strong uptrend, what you can do is have a set amount of BTC that you HODL and do not sell (unless the trend is changing) and then use the other BTC to only sell higher such that you generate excess USD. This strategy has a stronger focus on generating USD while keeping your BTC investment flat. If you want to maintain 9 BTC long whilst using the extra 1 BTC to buy and sell such you are realizing a gain of USD then you can do so and then place the excess USD in your bank account or onto a lending platform.

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