As the possibility of a U.S. government shutdown looms, Bitcoin investors face a new wave of uncertainty. The tension arises from the impact such a scenario could have on asset prices, including Bitcoin. Rest assured, this wave of uncertainty might appear daunting, but there are ways investors can capitalize on it.
Bitcoin’s bullish run towards $28,000 on October 1 was attributable to the uncertainty surrounding the U.S. debt limit. President Joe Biden’s last-minute signing of the spending bill prevented a shutdown, initially buoying the cryptocurrency market. However, now investors are grappling with whether this positive momentum will persist given that the supposed worst-case political-economic scenario has been momentarily averted. The spending bill only provides extra funding for the next 45 days while the House and Senate resolve their funding plans for 2024.
One would think it’s tempting for investors to use futures contracts to go long on Bitcoin. But, the danger of being liquidated if the price suddenly drops, and the unpredictability of a successful budget discussion benefiting cryptocurrencies albeit real, should not be the cause for all-consuming fear.
Despite avoiding an immediate government shutdown, the risk of an economic recession still looms. Factors like persisting inflation, surging oil prices, and a downtrend in the S&P 500 magnify this economic predicament. Investors are now closely watching the decision-makers, the lawmakers, who must find a fiscal solution before November 17. Any postponement in deciding on fiscal health will inevitably instigate more market volatility.
In light of these developments, Bitcoin’s increased value and breaking of the $28,000 resistance have prompted investors to brace for potential volatility as the debt ceiling decision nears. Professional traders, aware of the uncertain outcome of the political discourse, may opt for low-risk, limited-profit trading strategies like the reverse iron butterfly. This course of action is particularly viable considering Bitcoin’s price is expected to fluctuate significantly within the set options expiry date.
Essentially, for a Bitcoin investor to profit amid this tumult, the cryptocurrency’s price would need to drop below $26,630 or rise above $29,280 before October 27. These events may seem far-fetched, but may just as well occur given the current instability. Even if Bitcoin’s value remains stagnant, the potential losses could be 90% higher than potential gains. However, if investors believe in imminent volatility, a 6% movement within 24 days seems achievable.
The world of cryptocurrencies is never devoid of surprises or challenges. With Bitcoin investors, in particular, preparing for possible shocks from the political-economic landscape, strategic and informed trading moves will be crucial to weathering the storm. While uncertainties never cease to dominate decision-making processes, there are always ways to make informed, low-risk moves, even amid the chaos.
Source: Cointelegraph
