What does ‘buy the rumour sell the news’ mean?
It essentially means exactly what it says: people will buy a coin based on a rumour about a project, and will dump their coins after the announcement, regardless of whether it was true or good for the project.
Buy the rumour sell the news is a term that comes from trading stocks, but is clearly applicable to cryptocurrency. With the constant fast paced development happening in the cryptocurrency space, there are a lot of announcements coming up. A lot of these announcements promise big things – as a result the price begins to rise before the announcement as people ‘buy the rumour’. Sometimes these partnerships don’t come through, or they are over-hyped. Sometimes, they come through just as the rumour expected. However, regardless of the outcome, most of the time the phrase ‘sell the news’ is applicable. When the announcement occurs, or was meant to occur, you can see a fast price drop for the coin.
Here is a good example:
Verge currency announced that they were going to reveal a big partnership on the 17th April 2018. As a result, on the run up to the time of the announcement, the community bought the rumour.
As you can see from the graph, the price is running up towards the announcement. At the time of the announcement, the price takes a big nose dive. This is a perfect example of buy the rumour sell the news.
How can you take advantage of ‘buy the rumour sell the news’ fluctuations?
This is not financial advice, do you own due diligence and make sure you understand your trading decisions and that you believe they are the best move.
If you think a rumour is going to cause a price to run up before an announcement you can take advantage of this. You can literally join the crew and buy the rumour sell the news. If you know in advance, look at the trends of the coin and see if it usually rises before an announcement. If it does, get in early and sell a bit early. Do not try to sell at the peak, as you can easily miss it and then end up selling during the dumping phase.
Another possible time to buy is towards the bottom of the dump. This is hard to time but the price often bounces up after a dump of an announcement, so have a look at the previous trends for the coin during buy the rumour sell the news phases and see if this may be possible.
Thanks for reading this post about the term ‘buy the rumour sell the news’. I hope you found it helpful and you understand this price fluctuation that is often found in cryptocurrencies.