Cryptocurrency enthusiasts may be in for a surprise as according to an opinion by Matrixport’s Markus Thielen, it might be a sensible strategy for crypto traders to take long positions in bitcoin with a vigilant stop loss below $25,800. Why? There’s an expectation that Treasury yields are on the brink of falling, which could heighten the allure of risk assets, cryptocurrencies included.
Matrixport, a crypto services provider managing assets over $3 billion, is putting forward a cautious optimism about bitcoin. The viewpoint is that, rather than fleeing from the recent dip in prices which took a 10% toll on bitcoin on Aug. 15, traders might want to buy into it with a vigilant stop loss. This counter-intuitive strategy springs from testing the former resistance-turned-support level at $25,000.
As prices fluctuate around $26,000 and traders steel themselves for possible continuing losses, Thielen is singing a slightly different tune; “With vigilant stop losses, we would be bullish on bitcoin, expecting lower treasury yields and a rally in U.S. tech stocks. We had anticipated a 10% correction by season’s end, which has come to pass. Now, with the right risk management approach, traders could try to be bullish again,” said Thielen. For the uninitiated, a stop loss order is a pre-set buy or sell order aimed at limiting losses resulting from an unexpected turn in prices.
A crucial aspect for traders according to Thielen is keenly watching for any potential drop in bitcoin’s price below $25,800. This would sound the alarm bells and trigger the stop loss on the bullish position. As it stands, bitcoin was trading at $26,000 at the time of writing.
While Theilen’s perspective might be well-founded, there’s no denying that the cryptocurrency market is highly volatile, and any “surefire” strategies must be taken with a grain of salt. With the ebb and flow of Treasury yields and the seeming whims of tech stock rallies, accurately predicting the fate of any cryptocurrency, including bitcoin, can be as elusive as trying to catch smoke. Traders must invariably prepare for the twists and turns that the crypto world can throw their way.