Shop the Drop

If you ever speak to any trader – they will tell you to “Buy Low and Sell High”. Whilst that all sounds very easy, it takes experience to recognize the right moment and take advantage of it. This weekend one such opportunity came about when market news caused a bit of a drop in the value of some coins.

The regulators in the USA have for the longest time put the brakes on any type of crypto investment by US citizens. Whilst other countries have a more open view to investment in crypto currency, the SEC (Security and Exchange Commission) has imposed many laws to make it difficult for crypto exchanges to accept US citizens as customers. The past couple of months have been generally plagued by unstable behaviour in the financial system. Starting out with the news of the FTX debacle, and continuing with the forced closure of Silicon Valley Bank.

It seems that the SEC has now doubled-down on crypto, by going after what are generally accepted as stable firms, suing them for violation of securities laws. Because of these events, many of the large exchanges are moving away from serving US citizens, whilst others are opting for de-listing some of the “offending” coins. One such firm is a company called Robinhood. Robinhood is an, easy-to-use trading application targeting beginner investors that supports purchases of crypto, stocks, options, and ETFs. The app is available only in the USA. and serves customers in all the states except for Hawaii and Nevada. Due to having only US customers, the platform needs to operate in a way that legally satisfies all of the SEC’s conditions whilst dealing with crypto.

The market instability this weekend was caused by an announcement by the SEC that a few coins have been classified as securities and may not be traded as crypto. These coins are Solana, Cardano and Polygon. All of these coins lost considerable value after the announcement by Robinhood that they would no longer offer services for those coins.

In the grand scheme of things, the value of the coins were directly affected by market news. Market news tends to have temporary results and the value of the affected assets tend to rebound to their original value, which means that this is a good opportunity to “Buy low”. The 3 coins in question have lost 30% of their value in the past week but the good news is – that they are bound to bounce back; with Cardano and Polygon already recovering by 8% in the last 24 hours, whilst Solana has been a bit slower to recover at a recovery rate of 4.8% in the last 24 hours.

This has been one of those good opportunities to “Shop the Drop” and add a little more to the crypto portfolio. Let’s see where the next opportunity takes us!