Bitcoin (BTC) experienced a significant drop last week, falling from $69,000 to $60,800. This decline of approximately 18% came after reaching an all-time high of $73,800 earlier in the month. One factor contributing to the drop was the outflow of $836 million from the 11 new Bitcoin exchange-traded funds (ETFs) between March 18-21, as reported by Farside Investors.
This sudden decline raises questions about new investors and their willingness to continue holding Bitcoin if the downward trend continues. It is worth noting that this is the first time Bitcoin has reached a new historic high before its halving, which is scheduled for April.
To gain some insight into the current market and potential trading strategies, we spoke to three investors.
Lucas Kiely, Chief Investment Officer for Yield App, believes that Bitcoin’s movements have been influenced by the equity markets since the launch of the ETFs. He highlights specific moments in the day when liquidity surges and price action becomes inevitable. Kiely suggests taking advantage of these “golden hours” to capture significant BTC movements and generate profits. However, he warns that outside of these windows, liquidity shrinks, and price swings become more volatile. Kiely’s strategy involves buying weakness, selling strength, and implementing tight stops, resulting in him outperforming Bitcoin by 10% this month.
Michael van de Poppe, CEO and founder of MN Trading Consultancy, attributes the recent decline in ETF investments to the Federal Reserve (FOMC) meeting. It is common for markets and institutions to adopt a risk-off stance before these meetings. Additionally, the Bank of Japan’s decision to increase interest rates has negatively impacted risk-on markets. However, van de Poppe believes that these events should not have a lasting impact on the markets. He suggests that current ETF buyers are likely long-term holders and anticipates a decline in the initial interest as Bitcoin’s price rises. His advice is to buy Bitcoin dips during price corrections of 15-40% in preparation for the next bull cycle.
Chris Newhouse, DeFi analyst at Cumberland Labs, acknowledges that people are aware of the volatility associated with digital assets. He emphasizes the importance of distinguishing between short-term FOMO-based buying and long-term demand when investing in ETFs. Newhouse advises buyers to consider their intentions and whether they plan to actively trade the volatility or invest for the long term. For those pursuing the former, careful timing and attention to momentum are crucial, while the latter can benefit from dollar-cost averaging. Newhouse has been actively placing “stink bids” during periods of price action and believes that there is a constant demand for tokens across the market.
It is important to note that this article is for informational purposes only and should not be considered legal or investment advice. The expressed views and opinions belong solely to the author and do not necessarily reflect those of Cointelegraph.