Bitcoin (BTC) gave investors whiplash last week when it fell from $69,000 to $60,800 — a roughly 18% decline from this month’s all-time high of $73,800.
The drop was fueled, in part, by outflows from the 11 new exchange-traded funds (ETFs) for Bitcoin. A total of $836 million in funding left the funds between March 18-21, according to data compiled by Farside Investors.
Are new investors getting cold feet? How likely are they to continue holding Bitcoin if the downward spiral continues? (It is, after all, the first time that Bitcoin hit a new historic high before — rather than after — its halving, scheduled to occur in April.)
Related: Bitcoin maxis are about to kick off the altseason as BTC turns institutional
We asked three investors for some analysis and tips for trading today’s market.
Lucas Kiely, Chief Investment Officer for Yield App
Since the ETFs launched, Bitcoin has been dancing to the equity markets beat. At specific moments in the day, liquidity surges and price action become inevitable.
4 p.m. in London, FX Fix: Cryptocurrency funding resets align perfectly here.
9:30 a.m. in New York: U.S. cash equity markets open, and the game begins.
5 p.m. London: European traders head home, while New York enjoys lunch.
4 p.m. in New York: U.S. cash equity markets close, creating another opportunity.
These moments have been our golden hours for capturing big BTC moves and pocketing tidy profits. But beware: outside these windows, liquidity shrinks, and price swings turn ferocious. Being right pays off big, but a wrong move can be catastrophic.
Tip: Ride the equity market’s liquidity swells. My secret sauce? A lightning-fast momentum strategy. I buy weakness, sell strength, and keep tight stops. The result is that I've outperformed Bitcoin by 10% this month.
Michael van de Poppe, CEO and founder of MN Trading Consultancy
The recent decline in ETF investment was likely due to the latest Federal Reserve (FOMC) meeting — markets and institutions tend to go risk-off before FOMC meetings. Additionally, the Bank of Japan has started increasing its interest rates, which hurt the risk on markets. That's normal. Ultimately, this event should not have any impact on the markets at all. Powell was dovish on the economy's outlook, through which risk-on assets quickly rallied back upwards.
Finally, it shouldn't be the case that current ETF buyers are momentum-based. These first purchasers of the ETF are likely going to be long-time holders, but it could be that overall first-glimpse interest in the ETFs will decline over time the higher Bitcoin rises. That's entirely normal.
Related: Why Solana will prevail despite Ethereum ETFs
Tip: My advice would be to be counterintuitive: Buy Bitcoin dips when you can get in for a relatively low price. Use any Bitcoin price correction between 15-40% to accumulate for the next big bull cycle.
Chris Newhouse, DeFi analyst at Cumberland Labs
I think people understand the volatility of digital assets thanks to past headlines. Anyone buying into ETFs is doing it for exposure to the asset class.
Today’s buyers would do well to be cognizant of separating the “FOMO” (fear of missing out) type of buying from long-term demand. Understand that volatility will continue in the near term, and ask yourself if you’re buying into an ETF with plans to trade the volatility or if you’re investing in the long-term narrative. If you’re doing it for the former, get ready to actively focus on timing and momentum. If you’re doing it for the latter, remember dollar-cost-averaging (DCAing) is your friend.
Tip: I've been pretty actively placing "stink bids" for weeks like this in which we see "wicky" price action where dips are filled quickly. Given historical activity around the halving, the recent demand on the institutional side, and the retail demand for memecoins, it feels like there's a constant bid across all tokens from the majors to specific altcoin narratives. The market is in buy-the-dip mode and it feels like there needs to be some massive headwinds for a larger pullback to occur.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.