The Bitcoin roller coaster ride is on the rise again – the cryptocurrency is on the rise again, reaching the $ 7,000 mark this week.
Although recent history suggests that the bitcoin – the world’s largest digital currency in terms of market capitalization – may not maintain this level for long, fluctuations in cryptocurrencies will deter investors in their trading strategies. Provides valuable technical data to use, says managing partner Jack Tatar. Doyle Capital Management, a venture fund based in Pennington, New Jersey, invests in cryptocurrency companies.
He says the bitcoin has experienced a “tough trading environment”, but will bounce back to another support level.
“We’re starting to see more people get involved and get more data,” says Tatar, who is excited about the future of virtual coins. “The market has more utility and more data is starting to be tracked on a technical basis.”
Since December, bitcoin, which is lightly regulated, has given investors a show, hitting a high of $20,000 before dipping to $8,500 by mid-March and ultimately reaching lows in the $6,000 range, wiping out billions of dollars in market cap because of extreme volatility, hacking and orders from regulators. Large losses are not unusual for bitcoin and other digital currencies.
Stock investors sometimes rely on the 200-day moving average, which is an indication of a long-term momentum, and some corrupt traders say that the use of this benchmark is also useful in bitcoin trading.
“The [July] rally in Bitcoin actually ended in embarrassment with the 200 [daily moving average] of about ً 7,300,” says Matthew Greenspan, a senior market analyst at Tel Aviv-based social investment network eToro. “Technical analysis plays a big role in the analysis of cryptocurrency. Not only did the price fail to get above the breach but you can see that both times it tried for several days, checking the barrier, finally Before the car backs up. ”
The 200-day moving average also played a large role in bitcoin’s rally in 2017, especially in the beginning of the year when it provided the market with support, he says.
When bitcoin reaches a new high, investors should not focus on short-term gains and continue to allocate the coin to their portfolio, Greenspan says.
“Many bitcoin traders are looking for a longer term,” he says. “Even when the price reaches $ 8,000, many will find it cheaper than the all-time highs of $ 20,000.”
Greenspan says strategies such as the average dollar cost and the dips buy, commonly used by stock investors, have also been used by many corrupt investors because they are profitable price.
The price of bitcoin is often severely volatile, fluctuating hundreds of dollars in either direction in a single day. The rapid rises and falls in bitcoin are not unusual and instead of being fearful of it, investors should expect it.
“Stocks are pretty volatile, but bitcoin is way more volatile,” Greenspan says. “Things have been pretty calm in the last few months, but when it is moving it’s rather normal to see the price move by 20 percent in a single day.”
Bitcoin has been trading within a range as it hit $8,000, then bounced back to $6,000, Tatar says.
“When it drops below $6,000 is when people should really worry,” says Tatar, who believes that investors should allocate 5 to 15 percent of their portfolio in cryptocurrency assets such as bitcoin, Ethereum and other digital coins. “That’s when we have an issue.”
Bitcoin has the potential to hit the higher range and break out over $8,000, he says.
At the moment, we can see a further uptrend to make 8,000 as a support level, “says Tatar.” If you get a breakout above a certain level of $ 8,000, a new support level is likely and 8,000. Old resistance. ”
Bitcoin gains and losses should be viewed as a percentage rather than a specific dollar amount. Before they can start trading, investors need to determine how much they are willing to accept before they sell.
“Bitcoin can be reduced by 10% to 50% and you need to understand that it is going in,” he says. “If you enter and are not willing to take those risks for a potential reward, it is a personal decision.”