What does buy the rumour, sell the news mean?

Markets tend to move in anticipation of something happening – this is known as the rumor. This leads to people buying up an asset thus driving up the price. When the event actually occurs – this is known as the news. During the news phase most people have already bought the asset. As a result, when the event occurs, there are no more buyers to keep the price high. This leads people to sell, trying to make a profit thus driving the price down during the news phase. Traders will try to buy a cryptocurrency during the rumour phase and then as it enters into the news cycle they will sell it.

A visual example of buy the news sell the rumour.

So for example, when you see bitcoin in the news or on your social media feeds reaching all time highs, it’s probably a good indication that bitcoin is in it’s news phase and it’s probably a good time to sell. On the flip side, if no one is talking about it or there is negative sentiment and fear in the market it’s probably a good time to buy it.

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