With Bitcoin experiencing a significant collapse and liquidation cascade recently, over $1 billion was wiped out from the markets. This event marked the largest cascade in the current bear cycle. As the community braces for a week filled with events that could potentially bring back volatility, the question on everyone’s mind is, “What’s next?”
What you'll learn 👉
The Two-Fold Approach: Investment and Trading
When it comes to navigating the unpredictable world of Bitcoin, Michaël van de Poppe, the founder of MN Trading, suggests two distinct strategies: the investment thesis and the trading thesis.
Some analysts point out that August and September have historically not been favorable months for Bitcoin, often leading to corrections. However, the focus should be on the future outlook. October through December have been identified as promising periods for Bitcoin investment.
The community is also buzzing with the possibility of the approval of Bitcoin ETFs or Futures ETFs on Ethereum. In light of these factors, now is considered a good time to Dollar-Cost Average (DCA) and accumulate positions. A weekly or monthly DCA approach is recommended to maintain a balanced position in the markets. Timing the market bottom, as many would agree, is a futile endeavor.
Trading Thesis: Finding the Right Entry Points
When it comes to trading, liquidity is king. The 200-Week Exponential Moving Average (EMA) is a crucial level to watch, currently lying at around $25,650 on Bitstamp and $24,750 on Binance. Holding above this level is considered a sign of bottoming out and potentially marks a massive entry point. If this level is breached, the next big entry point is expected to be between $19,500 and $21,500.
Part of the trading community has identified two possible strategies based on liquidity:
- Aggressive Long Entry: A sweep at $25,750 could provide an aggressive long entry towards the other side of the range. However, this entry should only be taken after the sweep and when $25,750 is reclaimed.
- Golden Trade: A sweep of $25,200 towards $24,700-25,000 could be the start of a reversal, especially if accompanied by bullish divergences on higher timeframes. However, for this trade to be valid, $25,750 should be reclaimed in the bounce.
As the cryptocurrency market prepares for a week that could bring back much-needed volatility, both investors and traders have their strategies laid out. Whether you’re looking to invest for the long term or seeking to make quick trades, understanding the market’s nuances is crucial. With potential ETF approvals on the horizon and key support levels in sight, the community remains cautiously optimistic about what the future holds for Bitcoin.
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