Near Trading Catastrophe: Borrowed BTS At Exactly The Wrong Moment

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Here's a short story about a scoobie move I pulled while trying to be a smart trader. It all started Saturday morning.....

Hopefully, there's a lesson or two that others might learn from my bonehead move. They may not have to repeat the same mistake that I made. All in all, it could have been much worse. Here's what happened.

BTC Was On Its Way Up Last Saturday / Then We All Know What Happened!

I woke up Saturday morning February 3 to my normal routine. Got my coffee and kissed the wife goodbye as she left for a day-long engagement.

Nestling in comfortably on the couch in front of my laptop, I fired it up and checked the course of both BTC and BTS. BTS (or BitShares for those that don't know) is the coin I'm holding, but it tends to follow the path of BTC.

BTC was up around $9,400 and BTS about $.34 a coin. Here's where the trouble started, and where my first bit of advice comes in. I borrowed $100 worth of BitUSD and used it to buy that amount worth of BTS. A great way to earn extra BTS, but it only works if the market is moving up.

My advice? Spend a decent chunk of time just watching and getting a feel for what the crypto market is doing before you take any action. If I had done so, even just spent 10 more minutes watching, I wouldn't have borrowed BitUSD. I would have bought BitUSD and earned a bucket load of coin on the drop.

And Drop It Did - Way Down Near My Call Price

I'm telling you it was almost instantaneous. In these moments it can seem like the entire crypto market is out to get you. It was almost like clockwork how quickly the market dropped, just as soon as I borrowed!

As BTC dropped, BTS dropped along with it. Don't forget that China abandoned all international exchange right after I made the move. They can be out to get you too it seems. Lol.

Down BTC went to $8,400.

Then $7,400.

$6,400 came around not long thereafter, and now I had a bigger problem. BTC wasn't showing any signs of slowing on its decent, and BTS was right there beside it.

For those still learning, when you borrow BitUSD you have a call price. Your call price is the lowest amount that the value of BTS can drop before you are forced to pay back your loan. If you are called, the BTS you put up as collateral for the loan is used to pay back the debt. It is done so at what's known as the Squeeze Price, a price that's slightly higher than the call price.

You can see my dilemma. One possibility in the approaching face of a price call (or margin call) is to increase your collateral. This will lower the call price. Of course, you must not have used all your BTS or you must invest in some more. Luckily, I did have a chunk of BTS remaining and it all went in as collateral. In the end, that's what saved my BTS.

Catastrophe Averted But The Worst Wasn't Over Yet

BTC ended up dropping under $6,000 and I don't even know exactly how low BTS went. Down close to $.15 a coin or so, I think. At the moment, that low appears to be the bottom of the correction. One can only keep their fingers crossed and keep up the good fight when it comes to crypto sometimes.

As I mentioned earlier, had I waited and bought BitUSD I would have made a bunch of coin on the drop. I also could have borrowed after the bottom if I was brave enough. Instead, all my BTS was locked in during the duration of the drop. BTS is coming back up now, but it lost the China traffic and about $.08 cents behind where it started. BTS isn't recovering as fast as it fell.

What made my move even dumber, was my need to cash out of BTS. The family finances were calling for that money, as much as I hated losing it. That was not really an option once BTS dropped. It wasn't worth taking it out at that point anyway. To make matters worse than that, the whole family came down sick with a miserable cold. Fevers, sweats, chills, you name it. Ugggh!

Shit, I didn't know what to do. My wife knew that Crypto wasn't doing well. As BTS began to rise, I realized I could close my open position. That would cost me a bunch of BTS and really hurt on the return. I've learned to take my licks up front and be open with my lady, so I gave her the option. Gotta love that gal. She said no way are you letting that BTS go for that value. The wife didn't know it, but she told me to HODL. Lol.

A Boon In The End???

It's entirely possible that this whole situation will end up being a huge blessing before all is said and done. There's plenty of talk about BTC breaking out and seeing a nice increase in value. BTS will have to recover if the breakout stalls and doesn't continue up above $11,000.

I need to return to that price of $.34 to start seeing some earnings. That sure would be nice. At the very least, the whole situation was an incredible learning experience. And I count myself lucky to not have lost the majority of my BTS.

I do hope you were able to learn something from my musings here. Or have you already learned from your own mistakes? If you have any other ones to share, I would appreciate hearing them. Maybe I can avoid any more dunce caps in the future.

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