Bitcoin volatility is expected to soar. For that traders get ready with a number of strategies to anticipate.
In simple terms, volatility is the value of a price spike that goes up or down very quickly, as a reflection of the level of risk the trader is close to.
At the moment, one indicator shows that a large surge in volatility is taking place. Bitcoin Bollinger Bandwidth has dropped below 0.95 for the first time since 2016.
In addition, Raoul Pal, CEO of Global Macro Investors and Real Vision Group, on October 7, 2020, revealed that the volatility of Bitcoin could surge, where the 30-day historical volatility of Bitcoin has fallen rapidly and reached 20.
“In the past, when volatility went up 20 percent, prices jumped 7 times. The price of Bitcoin rose 6 times rapidly when the volatility hit 80 percent in a few months. In November 2018 the sharp decline occurred only once. However, such a high price hike will come, ”said Pal.
On another technical aspect, Bitcoin traders have been riding a roller-coaster in the last few weeks. The market reacted violently to news about United States President Donald Trump contracting COVID-19 and BitMEX founders and executives being accused of failing money laundering.
Bitcoin also experienced a major drop and fell below US $ 10,500 in a few minutes.
However, Bitcoin posed a threat, taking a US $ 10,500 rating and even rising to US $ 11,400, when the White House awarded a US $ 1.8 trillion aid package. Now Bitcoin remains comfortably above the US $ 11,500 region.
Bitcoin has yet to break away from traditional markets and has responded strongly to the macro market.
The final quarter of 2020 still presents many challenges for Bitcoin. The 2020 US Presidential Election, the surge in COVID-19 cases around the world, and geopolitical conflicts are the main factors that can push Bitcoin up.
In recent months, investors have seen the contestation of the presidential election as a volatile event in the market.
But with Biden gaining the upper hand on the poll results over President Trump, the market has had time to digest a possible election outcome.
According to Su Zhu, CEO of Three Arrows Capital, both Biden and Trump can benefit from Bitcoin.
For Zhu, Trump is still thick with the amount of US dollar policy stimulus that has entered the US economy, so as to increase liquidity and direct the market to Bitcoin.
Meanwhile, Biden from Democrats highly praises Modern Money Theory (MMT) for the US economy.
Based on MMT to create new money is to use fiscal policy. According to MMT supporters, the main risk once the economy reaches full employment is inflation. And it can be overcome by collecting taxes to reduce private sector spending capacity.
Strategy in the Middle of Volatility
The volatility of bad situations is bad and very reasonable, especially in Bitcoin. As long as you understand the number of strategies available, you can minimize the risk of loss.
First, save Bitcoin and earn interest. This is suitable for long-term-minded Bitcoin owners, hoping for high future increases without the hassle of buying and selling. You simply save on a certain number of platforms and earn annual interest as passive income. There are offers of up to 30 percent per year, with an imbalance given per day or per month.
Second, use the leverage feature on the derivative crypto-asset exchange. Using leverage, traders can open long (buy) or short (sell) positions many times more than their actual capital.
For example, when you have 0.1 BTC and want to sell it at a unit price of US $ 10,000, you can open a short contract position worth 10 BTC on Bexplus.
When Bitcoin price drops to US $ 9,300, you can take profit and your profit will be: 10 BTC X (US $ 10,000- US $ 9,300) / US $ 9,300 = 0.75 BTC.
Bexplus, as a crypto derivative asset exchange, offers leverage features of up to 100x. Even in times of high volatility, you can make a profit with the help of Bexplus.
And Stop Loss & Take Profit options can help you lower your risk and gain profit.
To have an account at Bexplus, there is no need for KYC requirements aka Know Your Customer. This certainly provides comfort for those of you who crave privacy.
In addition, the account verification process via e-mail is also fast, only a few minutes. Bexplus also provides a demo account worth 10 BTC, so you can immediately learn to trade Bitcoin using the leverage feature. Transaction fees are also small and up to 10 percent discount is available.
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