Bitcoin (BTC) caused a stir among investors last week as it experienced a significant drop from $69,000 to $60,800, marking an 18% decline from its all-time high of $73,800 earlier this month. This decline was partially driven by outflows from the 11 new Bitcoin exchange-traded funds (ETFs), which saw a total of $836 million in funding leaving the funds between March 18-21, according to data from Farside Investors.
This sudden decrease in value has raised questions about the confidence of new investors and their willingness to continue holding Bitcoin if the downward trend persists. It is worth noting that this is the first time Bitcoin has reached a new all-time high before its scheduled halving in April.
To gain insight into the current market and trading tips, we reached out to three investors for their analysis and advice.
Lucas Kiely, Chief Investment Officer for Yield App, points out that Bitcoin has been influenced by the movements of the equity markets since the launch of the ETFs. He highlights specific moments in the day when liquidity surges and price action becomes inevitable. These include the FX Fix at 4 p.m. in London, the opening of the U.S. cash equity markets at 9:30 a.m. in New York, the departure of European traders at 5 p.m. in London, and the closing of the U.S. cash equity markets at 4 p.m. in New York. Kiely suggests that traders should take advantage of these moments of high liquidity and employ a lightning-fast momentum strategy, buying weakness, selling strength, and using tight stops. By utilizing this strategy, Kiely claims to have outperformed Bitcoin by 10% this month.
Michael van de Poppe, CEO and founder of MN Trading Consultancy, attributes the recent decline in ETF investment to the Federal Reserve (FOMC) meeting. He explains that markets and institutions tend to become risk-averse before these meetings. Additionally, the Bank of Japan’s decision to increase interest rates has negatively affected risk-on markets. However, van de Poppe believes that these events should not have a significant impact on the markets, as Federal Reserve Chairman Jerome Powell expressed a dovish outlook on the economy during the meeting. He advises investors to be counterintuitive and buy Bitcoin dips during price corrections of 15-40% to accumulate for the next bull cycle.
Chris Newhouse, DeFi analyst at Cumberland Labs, emphasizes that people are aware of the volatility of digital assets due to past headlines. He suggests that individuals investing in ETFs should differentiate between FOMO buying and long-term demand. Newhouse advises considering whether one is trading the volatility or investing in the long-term narrative. For those trading the volatility, timing and momentum are crucial. However, for those investing in the long term, dollar-cost averaging (DCA) is recommended. Newhouse personally places “stink bids” during weeks with price action characterized by quick dips and recoveries. He notes the historical activity around the halving, institutional demand, and retail demand for meme coins, indicating a constant bid across all tokens. Newhouse believes the market is currently in a buy-the-dip mode, and significant headwinds would be necessary for a larger pullback to occur.
It is important to note that this article provides general information and should not be taken as legal or investment advice. The opinions expressed by the individuals interviewed are their own and do not necessarily reflect the views of Cointelegraph.