If you woke up today and looked at your portfolio and screamed "WHAT THE F*CK HAPPENED?" then don't worry. You're not alone.
What happened is that this morning Bitcoin dropped nearly $9000 (-15%). The crypto market cap dropped over $210B (ca -10%) and around $8-$9B in long positions completely liquidated.
Why did this happen?
It appears that this drastic movement happened in connection with a tweet stating that U.S. Treasury will be charging financial institutions for money laundering using crypto.
It is important to note that this tweet has been deemed shady & fake for several reasons. 1) This account limited replies to the tweet by only people that @Fxhedgers follow or mentioned in the tweet. 2) The timing of the tweet. 3) Jake Chervinsky, the general counsel of Compound finance stated that he doesn't believe that this tweet is credible because money laundering cases fall under the jurisdiction of the Department of Justice (DOJ) and not the U.S. Treasury.
How can we prevent something like this?
Well let me start by saying this, I'm a fan of Technical analysis and I don't think any amount of TA could've predicted this. This happened because of FUD followed by Whales moving their money. It is of utmost important to remember that (as of the time of writing this) 52.2% of the crypto market is dominated by Bitcoin. So anytime Bitcoin plummets or rises drastically it will affect the altcoins. No matter how much you believe in an altcoin project, you have to remember that they're all minors and Bitcoin is the parent. If Bitcoin says we're moving to X. Altcoins will follow.
Closing words:
If you are a long term investor and closed your positions today in red because of fear, let today serve as a valuable lesson. Do your own research. Investigate if the news are accurate or false. The price of Bitcoin has already recovered around 7% as of the time I'm writing this.
Use this time to re-evaluate your trading style. Is day trading really for you? Can you handle your swing positions hitting stop losses? Are you able to hold and not be concerned by movements like today?
Always make sure to pay attention to Bitcoin and it's dominance over the crypto market. When Bitcoin makes dramatic moves like today, it affects the entire alt market no matter how big or promising the project is.
Technical analysis is not the be-all end-all. Don't solely rely on it. Pay attention to the fundamentals, news and other things.