Here’s Why I’m Selling Half of My Crypto Portfolio: Don’t Buy the Dip Until You Read This

If you have been following my stories, you would know that I often use the 20 EMA, 50 EMA, and 200 EMA indicators for technical analysis.

Specifically, I focus on the 20 EMA for swing trading and position trading on the 1-day, 3-day, and 1-week timeframes. However, this strategy may not work perfectly for scalpers and short-term traders.

Recall that most cryptocurrency tokens had massive pumps before the Bitcoin spot ETF news. Thereafter, I began to monitor how Bitcoin reacted at the 20 EMA support level on the daily timeframe.

Now you may ask, was the Bitcoin spot ETF a buy-the-rumor and sell-the-news event? Yes, that is exactly what happened in the past few days.

For the first time since October 16, 2023, Bitcoin recently had a candle close below the 20 EMA on the 1-day and 3-day timeframes, respectively. This recent development has caused panic in the crypto community and people are asking what is next for Bitcoin and the cryptocurrency market in general.

Should You Buy the Dip or Wait for Deeper Pullbacks?

Most crypto influencers keep encouraging you to “Buy the dip”. They don’t care whether the market is bullish or bearish, they just want you to buy more. But the real question you should ask yourself is when should I stop buying the dips?

You see, Bitcoin usually gives warning signs before any major crash in the market. However, your inability to interpret candlesticks or use the exponential moving averages correctly can stop you from making informed decisions.

So, since Bitcoin is the leading asset in the cryptocurrency market, whatever happens to Bitcoin affects altcoins on a large scale. Hence, I will focus on the BTC-USD pair in this article. Now the next question is:

Sign Number 1: Closing The Daily Candle Below 20 EMA

If you’re used to buying dips every time we have pullbacks in the market, it’s time to change your strategy. Instead, start taking partial profits whenever Bitcoin breaks and closes below the 20 EMA, with a bearish candlestick on the daily timeframe. See the screenshot below.

• Carefully observe the bearish candlestick leading to the break of structure below the 20 EMA. The candlestick’s body should close at least 40% below the 20-EMA on the daily timeframe. So, focus on the body and neglect the wicks (shadows). See (arrow) the screenshot above.
• If you’re a swing trader, take at least 40% profits on Bitcoin and your altcoins portfolio whenever Bitcoin closes below the 20 EMA with a strong bearish candle on the daily timeframe.
• Wait for a decent pullback towards the 200-day EMA to buy cheaper.

However, if the market turns bullish by breaking above the 20 EMA on the daily timeframe, this strategy would become invalid. Yet, you will still have 60% of your positions in profit, and then you can reinvest the 40% if the bullish strength continues.

Sign Number 2: Pay Attention to the Daily Candlesticks

To my surprise, many traders often overlook the importance of candlesticks on their charts, because they can not decode the information presented by those candlesticks. So, if you are one of them, pay attention to this part.

Now, look at the example below and explain what the candlestick with an upper wick (arrow) represents. Does it support a bullish or bearish bias?


Of course, here is the answer: A bearish doji candle on the daily timeframe, such as the one above (gravestone doji), indicates that sellers are pushing the price downwards. Despite this warning sign, most crypto influencers would encourage you to buy the dip because they can’t identify simple reversal candlesticks.

If we look at the recent action on Bitcoin on the daily timeframe, we can see that the price dropped lower after a bearish doji candle was formed. See the screenshot above.

Thereafter, we had a strong bearish candlestick that closed below the 20 EMA on the daily timeframe. This was the second bearish confirmation sign indicating that bears have taken control of the market. Hence, that was a perfect time to take some profits.


Note: Yellow = 20 EMA, Green = 100 EMA, and White = 200 EMA.

Sign Number 3: When to Buy Cryptocurrency and When to Sell

Besides using the 20 EMA on the daily timeframe, you can also apply it to the 3-day timeframe for better results. To get started, set your chart on the 3-day timeframe and observe the price action around the 20-EMA

If the asset breaks and closes below the 20 EMA on the 3-day timeframe, it’s time to sell a larger portion of your portfolio and be ready for a decent pullback.

This signal usually marks the local top for the cryptocurrency market, especially Bitcoin. Whenever we have this sign in the market, you can expect a 30–40% crash. See the screenshot below and take note of the first arrow (sell candle).


Sometimes, after a 3-day candle close below the 20 EMA, the market may tend to pump a little before retracing. However, you need to stay calm and not be fooled by market markers. See the warning (X) sign in the screenshot above.

When you see these signs on your chart both on the daily and 3-day timeframe, stop buying the dips even if your favorite crypto influencer encourages you to do so. Instead, take some profits and stay on the sideline if you don’t intend to short the market.

To open new swing trades or add to your long positions, wait for the EMAs to reset, and then take a new long position if Bitcoin breaks above the 20 EMA on the daily or 3-day timeframe. (See the last arrow (buy) in the screenshot above).

For invalidation, wait for the price to break above the most recent high on the daily timeframe. This indicates that buyers have taken control of the market.

Test/Assignment

• Now, open your trading app, and add EMA 20 to the BTC-USD pair on your chart.
• Set your timeframe to 1-day and 3-day to monitor the current pullback we have in the market.
• Observe the chart, and you will see Bitcoin has closed below the 20-EMA on the 3-day timeframe to confirm another bearish thesis.

Now, with this information at your disposal, what is your next plan? Would you just open your trading app and hit the buy button because someone advised you to buy the dip?

I believe you can now use the techniques we discussed in this article to set buy orders at specific key support levels using the EMAs and dollar-cost averaging method. In my opinion, Bitcoin will likely drop to the $35K region or lower in the next few days to interact with the 200-EMA on the daily timeframe.

Final Thoughts

Based on this comprehensive analysis, I have decided to sell more than 40% of my swing positions on coins that I bought when Bitcoin was trading below $18,000. I plan to do this soon, as I expect Bitcoin to retest the $42,000 region before selling off my positions.

However, I won’t take any profits on my long-term portfolio because I believe we have more room for growth in this bull market. So, if you’re a long-term investor, get your funds ready to buy the dips because we might see Bitcoin fall below $35,000 anytime soon.