BTC Price Has Dipped Below $40K: What now?
The crypto world has lately been abuzz with news that the value of Bitcoin has fallen drastically again. On April 12, 2022, the value of Bitcoin reportedly fell by almost 15% over the previous week. Attempts were made to rally above the value of $40,000, however, traders ran into a wall of resistance at around $40,650. As a result, the price of Bitcoin (BTC) eventually fell to $39,600.
According to online news sources, the fall in the prices of Bitcoin is a result of a wider downturn in prices across the financial markets around the world. It has been found that some major geopolitical issues and the possibility of a tighter monetary policy by the US Fed led to this turn in the global financial markets. Analysts have made certain observations on this downward turn, and some have looked toward swing trading of BTC in such a scenario. Swing trading is one of many trading strategies used by CFD traders, especially in the crypto sector. In this article, we will discuss the viability of the swing trading strategy in bitcoin trading. But before we get to that, let’s take a look at some observations made by analysts regarding the Bitcoin price fall.
Insights About the Bitcoin Price Fall
Here are some of the points made by analysts about the fall in the value of Bitcoin in the last few days –
- A crypto analyst who goes by the name ‘Credible Crypto’ on Twitter observed that the current price fluctuation for BTC is a result of the retesting of a big S/R zone. He also posted a chart that showed multiple similar retests which were done at this level since 2020.
- Some other analysts are predicting that the recovery would be lackluster. It was observed in a report that the profits earned by the investors were quite modest since the Bitcoin breakout. The report further said that since mid-February, the crypto market has only seen a profit of around 13,300 BTC per day. Although this does not seem like an extreme value at first, it is affecting the prices significantly. The recovery in the recent days has also been subdued. At present, the only thing that can help is new inflows in the crypto market.
- A crypto trader by the name of BTCfuel predicted that a “mega pump” could be coming for Bitcoin in the near future. He posted a chart supporting his claim and said that the Bitcoin correction of 2022 looks a lot like the one in 2021. This means that a strong Bullish move is possible for Bitcoin.
Strategy for Bitcoin Trading Amidst the Bitcoin Price Fall
Before dropping below the $40,000 mark on April 12, the price of BTC rose to approximately $42,000. As a result, many traders speculated long positions, expecting a bullish move to continue. As the price of Bitcoin continues to hover below $40,000, some analysts are focusing on the concept of swing trading as an option. Swing trading employs longer timescales in comparison to other forms of day trading, which may be useful for volatile cryptocurrencies like Bitcoin. Let’s take a look at how swing trading is done, and how you can incorporate it into your trading strategy.
What is meant by Swing Trading Bitcoin?
In Swing Trading Bitcoin, deals are speculated from price movements across a medium to short time frame. This strategy aims to catch the price swings in the market that occur over a period of days, weeks, or months. Traders can look out for two types of swings in this scenario –
- Swing highs: This is when the market reaches a peak before going back down, giving traders an opportunity to short trade.
- Swing lows: This is when the market goes down and then bounces back, giving traders an opportunity to long trade.
Since Bitcoins are actively traded and have one of the largest market caps in the crypto world, swing trading can be a useful approach to CFD trading of cryptos.
Advantages of Swing Trading Bitcoin
Here are some reasons illustrating how swing trading may impact your CFD trading strategy–
- Dealing with Volatility: Swing trading is a useful way to navigate volatility and spot potential trading opportunities on volatile crypto assets like Bitcoin.
- Less stressful: Swing trading is especially useful during this time because of the lower frequency of trades. It is also significantly less stressful as compared to other forms of trading because it employs a longer timescale.
- Long-term strategy: With swing trading, you do not have to spend hours of your time monitoring the market. The trades can last for days and almost weeks. This will give you time to figure out how the market plays out.
Disadvantages of Swing Trading Bitcoin
With the advantages of swing trading Bitcoin also come certain disadvantages. Here are some of the challenges traders can face with swing trading during this time –
- Tricky market timings: It can be difficult to time the market swings sometimes. Even experienced bitcoin CFD traders often have trouble with this aspect.
- Price Gaps: Some traders can encounter problems with price gaps when holding their position in the current crypto market overnight or over some days. This is because a lot of reports and developments are released in the after-hours of the market.
Is Bitcoin safe?
Considering how volatile the Bitcoin market has been in the past year, you might be wondering if it is safe to invest in this market as CFDs. There is no definitive answer to the question – Is Bitcoin safe? Bitcoin is very different from a fiat currency like the US dollar, as its value can fluctuate almost 20 percent in a single day. However, with the right strategies and guidance from platforms like iFOREX, it can present plenty of potential trading opportunities (and an equal amount of risk, as with all trading).
Even as the price of Bitcoin falls, swing trading can be a useful strategy to deal with the current market situation by helping traders to navigate the volatility. There are the risks of price gaps and tricky market timings, but with some guidance, you can get the hang of swing trading and incorporate it into your personal strategy.