A sharp jump was recorded on the night from Sunday to Monday. In addition to Bitcoin, ETC also lost value.
By morning, Bitcoin had fallen to $50,900, its worst performance since the collapse of the FTX exchange. Ether lost more than a fifth of its value but then recovered to $2,286. Most leading cryptocurrencies were also in the red.
Reasons for the market decline:
1/The fall in cryptocurrencies comes amid a global sell-off in stocks, driven by concerns about the economic outlook and doubts about the justification of large investments in artificial intelligence. Geopolitical tensions in the Middle East further increase investor caution.
2/The upcoming US presidential election has added uncertainty to the cryptocurrency market.
3/The outflow of funds from cryptocurrency funds could also put pressure on the markets. In such conditions, ETF issuers are forced to sell coins. Their actions put pressure on the cryptocurrency rate.
Cryptocurrency Trading Strategies â Mistakes to Avoid
To trade cryptocurrency with profit, you need not only to have a well-thought-out strategy. It is important to avoid mistakes that novice traders often make:
Missing Out Syndrome (FOMO);
Excessive trading (overtrading) and rapid change of ideas;
Trade with funds you cannot afford to lose;
Superficial market analysis;
The desire to take revenge on the market;
Excessive trust in the opinions of other traders.
Bitcoin Trading Strategy: Volatility
Cryptocurrency is several times more volatile than traditional assets. Therefore, the Bitcoin options strategy with neutral straddle market prices performs well on it.
Within the strategy, two types of positions are distinguished:
A long straddle involves opening a buy and sell option at the same strike price and contract expiration time. Regardless of which direction the market starts to move, you will be able to take advantage of your straddle position by increasing volatility.
A short straddle is the sale of a put and a call option at the same price and expiration date. As a result of selling, the trader makes a profit at times of low volatility in the market. The lower the market's ability to move, the higher the profit.
Conclusion
The dynamism of the cryptocurrency market provides good opportunities to quickly increase your capital. At the same time, the risks associated with lower (compared to traditional markets) predictability are also growing. In the cryptocurrency market, the window of time for making decisions is noticeably shorter. It is necessary to act quickly and clearly, to have time to react to the changing environment.
It is important to choose the right crypto strategy and timeframe for trading. For short-term traders, the strategy must meet two requirements: work well in conditions of high market volatility and provide leading signals, allowing you to quickly respond to changing conditions.
For a long-term strategy, the most important requirement is a low number of false signals and minimal lag.