Expert Insights on Bitcoin's Wild Ride: Strategies Amid ETF Outflows and Market Volatility
Summary:
Bitcoin experienced an 18% drop from its monthly high, partially due to $836 million outflows from newly launched Bitcoin ETFs. Three experts weigh in on the situation. Lucas Kiely of Yield App leverages liquidity surges in equity markets to maximize profits. Michael van de Poppe of MN Trading Consultancy suggests buying Bitcoin during price dips to prepare for the next bull phase. Chris Newhouse of Cumberland Labs advises differentiating between short-term and long-term buying strategies while understanding that market volatility is expected.
Bitcoin experienced a jaw-dropping fall from $69,000 down to $60,800 last week, a roughly 18% reduction from its all-time peak of $73,800 this month. This plunge was partially caused by sizable withdrawals from the newly launched Bitcoin exchange-traded funds (ETFs), with $836 million draining out between March 18 and 21, according to statistics from Farside Investors. Is the volatile nature of Bitcoin terrifying new investors? And if the downward trend continues, will they continue their holdings?
The first-time phenomenon of Bitcoin reaching a record high prior to its April halving led us to seek insights from three investors, regarding these circumstances and for trading advice in the current market scenario.
Lucas Kiely, the Chief Investment Officer for Yield App, explains that since the inception of the ETFs, Bitcoin's performance has been in sync with equity markets. He points out that specific times of the day see an increase in liquidity and inevitable price movement. According to him, these timeframes have been extremely lucrative, allowing noteworthy profits from significant Bitcoin shifts. However, he also warns that outside of these periods, liquidity contracts, making price fluctuations more intense.
Kiely's trading tactic involves leveraging the liquidity surges in equity markets. He believes in purchasing in times of general negativity, selling during times of positivity, while keeping close tabs on any changes. This approach has led him to outperform Bitcoin by 10% in the last month.
Michael van de Poppe, CEO and founder of MN Trading Consultancy attributes the recent dip in ETF investment to the previous Federal Reserve (FOMC) meeting. As a rule, right before FOMC meetings, markets and institutions tend to take lower risks, which has been just explained. He advises buying Bitcoin when the price drops and using any price cutbacks between 15-40% to accumulate for the upcoming major bull phase.
Chris Newhouse, a DeFi analyst at Cumberland Labs reminds that volatility should be expected in the near future, thanks to infamous past headlines. He suggests newcomers to differentiate between buying out of fear of missing out (FOMO) and long-term investment strategies. Depending on the investment motive – trading volatility or believing in the long-term narrative - one either needs to stay focused on timing and momentum, or remember the age-old principle of dollar-cost-averaging.
Newhouse admits to having been actively submitting "stink bids" during the weeks that saw quick price recuperation after severe drops. Looking at the historical pattern around Bitcoin's halving, the recent institutional interest, and the demand from retail for memecoins, he feels the entire market is in buy-the-dip mode, and any significant pullback would necessitate substantial headwinds. This article is for informational purposes only, and is not intended as legal or investment advice. The views expressed here solely represent the author's perspective, and may not represent the viewpoints of Cointelegraph.
Published At
3/25/2024 9:17:05 PM
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