Trading with a USD stablecoin or BTC/ETH… as base currency?

What’s best to use as your base currency?

The usual answer here is, it depends what your goal is and what your market expectations are.

“If you believe in BTC’s future and your goal is to gather more BTC trade alts vs BTC, if you want gains in FIAT currency use a USD stablecoin as your base currency.”

However is this always the best strategy? We’re still in a down-trending market so logically holding on to USD stablecoin is probably the best thing to do until there’s a clear indication of reversal.

But let’s assume we want to keep trading and our goal is to get more BTC rather than USD stablecoin.

Imagine we bought TRX on January 8 at 6 am (Paris time) and we paid for it with BTC expecting a TRX outbreak (because of rumours, TA, news …etc).

Now imagine another scenario where we bought the same TRX with USDT (see below).

As you can see our profit would be around 43% if we managed to sell at the top in both cases.

During this time BTC gained a little vs USDT but not that much around 1.5% max. but look at what happened around the exact time we sold our TRX. BTC plummeted 13% vs USDT.

Although we made about the same profit when TRX was going up, BTC’s sudden drop wiped out quite a bit of our profits. If you traded vs USDT you could have accumulated more BTC just by staying in USDT after your successful TRX trade.

In a down trending market, it might be better to trade vs a stable coin even if your goal is to increase your amount of BTC. Another reason is that on every BTC drop, alts generally drop harder which makes it more difficult to recover from. (see also https://medium.com/@macropus/diggin-a-hole-cb020e2a5dfb)

The above references an opinion and is for information purposes only. It is not intended to be investment advice and may contain affiliate links. Seek a duly licensed professional for investment advice.

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Happily hopping up and down on the cryptocurrency markets

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