Bitcoin ETFs: Brace for volatility and speculation
By Paul Reid
11 January 2024
The long-awaited approval of Bitcoin ETFs has finally arrived, marking a pivotal moment in the cryptocurrency's history, and Exness traders are getting a front-row seat. This momentous decision has opened the floodgates for institutional investors, unleashing a coming torrent of capital and introducing a new level of volatility to the market like never before.
As institutional players enter the market – including hedge funds and pension funds – Bitcoin trading volume is poised to surge, potentially pushing Bitcoin's price to unprecedented new levels. And now everyone is thinking Bitcoin is about to rocket to new all-time highs. But will it?
Navigating Bitcoin volatility and speculation
While volatility may seem daunting to some traders, for others it is the life pulse of the market where opportunities are born. The increased liquidity and institutional involvement could indeed attract a wider audience to the cryptocurrency market, potentially fueling further price appreciation in the short and long term, but it might not be a straight ride to the heavens as some are expecting.
In the past, Bitcoin rallies started when news or events triggered positive sentiment. The biggest investors of that time would recognize the potential and buy in, and the retail trading crowd would follow, chasing the already bullish trend. That dynamic has changed.
The surge in institutional involvement brings with it the specter of heightened volatility and price manipulations. The sheer size and influence of the new and larger investors can amplify price swings and create sudden market disruptions without any warning, making both fundamental and technical analysis problematic.
But this doesn’t mean Bitcoin trading is getting harder to forecast. Traders now need to simply step back and look at the bigger picture. Where is Bitcoin going? There’s no doubt that 2024 is going to be a bumpy ride, and day traders trading both long and short are in for a challenging and exciting time, but like the S&P, the long run might turn out to be a very solid investment.
As institutional money enters the crypto space in the coming days and weeks, we should see significant and possibly rapid price rises on the BTC chart. Those rises may well trigger the vast majority of OG crypto traders to board the Bitcoin money train, at which time, the large investors may choose to withdraw their investment, making a quick killing to start the year with a strong balance sheet.
The massive waves will likely continue throughout 2024 and beyond. As a retail trader, you might consider setting modest Take Profit limits for the first pump and be ready to short BTC at the first sign of a dump.
Tight stop loss might not be the best idea, as epic volatility will close orders that are otherwise good choices. To keep those orders alive, you’ll need plenty of equity. Exness’ Stop Out Protection will rescue many BTC orders throughout 2024, but it’s not wise to rely on that feature, so be mindful of your leverage setting. Simply, don’t be greedy.
In the long term, It’s probably going to be a gradually rising roller coaster ride to new all-time highs and a new higher range that won’t settle for many months. One thing is for sure: day traders who follow the market minute-by-minute are in for an exciting time, and they will witness multiple opportunities every single day.
This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.