Reading trades in satoshis seems to be a hot topic for everyone who doesn’t understand it, so I figured I’d try to give a Layman’s terms example of why we should be reading our trades in satoshis, and not USD if the trade was made (and subsequent ones are also) versus BTC.
For ease of explanation I will be using figurative numbers and a made up coin.
Let’s say 1 months ago we bought 1000 X-coins for $10 each. The value of BTC at the time was $10,000. This means that our X-coins are 100,000 Satoshis per coin and we spent exactly 1 BTC to acquire them.
Fast forward 1 month later. We head over to Coinmarketcap and check the price of our X-coin and see that it’s still sitting at $10! No crazy gains, but hey, at least we’re not losing any of that sweet USD value!. However, during that time BTC also went from $10,000 to $20,000 which means our X-coins are now valued at 50,000 satoshis.
If we open up Blockfolio we’d see that our X-coins are sitting at breakeven ($10,000) in terms of USD, but if we toggle to BTC we’ll see that we’ve dropped from 1 BTC to 0.5 BTC value. That’s a very significant drop, even if we’re showing breakeven in USD.
By simply holding our 1 bitcoin we would’ve made an extra $10,000 and maintained 1 full BTC instead of being breakeven in USD and down 50% in BTC.
If you’re trades are losing value in satoshis, regardless if they’re increasing in USD you’re making losing trades and would’ve been better off just holding your bitcoin. These are things we must keep in mind when we’re trading versus BTC and not USD.
The inverse of this example is also true, if you are in a trade that is going up in USD while BTC is bearish, your Satoshi value will be skyrocketing. This is a scenario that doesn’t play out all too often but if you’re lucky enough to catch one of these trades, and acquiring more BTC is your goal, getting out while your trade is up and BTC is down is a great way to accomplish that.
Unfortunately for us as traders who aim to capitalize on the volatility of these markets, until decentralized exchanges take over and there are a bunch of different crypto and/or fiat pairings, BTC will remain the “king” and pull the market in whichever direction it’s moving most of the time.
At Crypto Traders Pro, we like to do a mix of trading against both bitcoin and USD pairs. Which do you prefer?
I hope this was an easy to understand example that cleared up the debate between reading a trade in satoshis and USD. Drop a comment and follow if you want to see a lot more content about trading, investing, blockchain, interviews and mass adoption of cryptocurrency.
Thanks for taking the time to read and we’ll see you on the moon!
