Adam's DOGE Coin cost-basis illustrates the respective average cost basis between three different groups - miners, swing traders and short term or novice trades - each group having different investment horizons, average tenure in the market, costs basis and break even points.
Similarly to my prior conversation regarding BTC and it's cost basis, we see a similar but exaggerated state of affairs, specifically;
1) miners have grossly lower costs basis due to average cost of entry. The bottom line represents only 40% of the market.
2) average swing traders lie above the middle line. Breakeven is experienced as price approaches this line, with breakeven trading ensuring. Herein lies the problem with DOGE. With the high dilution factor, it is just a matter time that average price will be drawn down towards the overall average experienced in the market as new trading volume cannot overcome the dilution factor experienced daily. The core issue now, is whether the middle line is being respective, or it will be broken and form resistance for lower prices!
3) Novice traders caught at the top are at net loss with dilution factor effects noted above applying. This means, volume of new long must be large enough not only to lift average breakeven, but also be sufficiently large enough to overcome on-going dilution. Net Shorts experience unrealized gains - 'spike' risk offset by dilution factor!
Three lines - decision matrix is now simple. No more FUD or FOMO!
Similarly to my prior conversation regarding BTC and it's cost basis, we see a similar but exaggerated state of affairs, specifically;
1) miners have grossly lower costs basis due to average cost of entry. The bottom line represents only 40% of the market.
2) average swing traders lie above the middle line. Breakeven is experienced as price approaches this line, with breakeven trading ensuring. Herein lies the problem with DOGE. With the high dilution factor, it is just a matter time that average price will be drawn down towards the overall average experienced in the market as new trading volume cannot overcome the dilution factor experienced daily. The core issue now, is whether the middle line is being respective, or it will be broken and form resistance for lower prices!
3) Novice traders caught at the top are at net loss with dilution factor effects noted above applying. This means, volume of new long must be large enough not only to lift average breakeven, but also be sufficiently large enough to overcome on-going dilution. Net Shorts experience unrealized gains - 'spike' risk offset by dilution factor!
Three lines - decision matrix is now simple. No more FUD or FOMO!
