Predicting the fallout from the novel coronavirus on our global economy is impossible. Preparing for what’s to come is challenging, with financial markets sustaining unprecedented highs and lows after the world pasts the one-month mark for social distancing protocols. Experts in the cryptocurrency space have determined that valuations won’t grow throughout the pandemic, which is slated to last for another several week at the minimum.
Medical experts believe this period will exceed upwards of two years until a vaccine is created. With all these different estimations, the full extent with the future economic fallout is unknown. Investors & Traders in the cryptocurrency or blockchain industry must account for higher volatility becoming normal, with market valuations in a flux of a change. A quick tip to avoid the abnormal instabilities by stockpiling cryptocurrencies until the pandemic is resolved.
It should be mentioned that an influx of financial analysts is expressing that coronavirus won’t alter market volatility to an abnormal valuation. These individuals are incorrect, with traders having to face unprecedented conditions. It’ll mean changing investment strategies, as some CEOs predict that COVID-19 will terminate an eleven-year norm. What previously worked throughout the last decade won’t hold influence over CFDs, Indices or Equities. This extensively applies towards Forex and Stock trading as well. These predictions were remarked by Timothy Sykes, the CEO of Millionaire Media. He’s also the author behind a best-selling novel, “An American Hedge Fund”.
Timothy Sykes has provided public insight into future trading conditions. He remarked: “Investors must be open to adapting. I’ve often said we adapt or perish, don’t become the dinosaur. Traders must adapt for the potential 2nd or 3rd wave, which we don’t know is guaranteed. Recovery of cryptocurrency markets could become V-Shaped or U-Shaped, which everyone must strategize around.”
Volatility Could be Beneficial
Uncertainty in markets creates immediate panic amongst investors, prompting them to selloff their contracts or stocks to a brokerage house. Throughout the COVID-19 Pandemic, this has happened daily. Those that haven’t sold their CFDs, Stocks or Forex Investments are compiling strategies that’ll allow these periods of uncertainty to become opportunities. The Founder of HyperSphereAI noted that volatility could become best friends with traders, as the most significant historical investors used price fluctuations to their advantage.
Evgen Verzun, the Founder & CEO at HyperSphereAI, stated: “Theoretically, the more volatility is, the more money can be made, but it’s the same issue with risks. That’s why traders should adapt their strategies to the new reality. Usually, that means reducing working capital and leverage to lower risks in times of higher volatility.
Those sentiments continued with: “Uncertainty is also a time of big opportunities. The growth of potential profit and greed sometimes blinds traders, making them forget about risks. That’s why it’s not the best time to trade with big leverages in times of uncertainty and recession. Risk management and awareness about potential facts that may influence the market. That’s the key, and there are ways to position portfolios to meet the waves of volatility.”
What Can be Done?
Other executives in the cryptocurrency industry remarked similar statements to Evgen Verzun. This included the Founder & CEO of HedgeTrade, David Watson. He expressed to reporters via videoconference that: “Crypto traders who tend to view volatility as normal have many potential ways to stay profitable during today’s Coronavirus crisis. There are ways to position portfolios to meet the waves of volatility, as well as earn additional crypto on the side to increase their holdings.”
David provided reporters with several suggestions for strategies that could assist with COVID-19. Watson noted that liquidation at the highest levels should be implemented throughout several months. Two aspects should individually be considered, with those being how Bitcoin & Cryptocurrencies correlate with other assets with traditional markets. These correlations can apply with Trading Derivatives or Cryptocurrency CFDs. Official sentiments from David Watson remarked: “Even if you are like to remain with Bitcoin, it’s imperative not to over-leverage since the world is changing daily. Technical and fundamental analysis can go out the window at a moment’s notice.”
Watson finished his sentiments by mentioning Bitcoin & Cryptocurrency traders should alter their mindsets. He officially stated: “In recent months, we’ve seen huge dips correlating to the drops in the S&P 500 and global markets. Cryptocurrencies don’t always follow traditional market trends, but with the devastating global economic crisis and COVID-19, even crypto traders are liquidating to cash in preparation of tougher times. Traders that have invested with BTC for a long time will see huge sell-offs initiated by fears of economic collapse; they may want to respect the current trend, switch sides and short Bitcoin.”
CEOs Collectively Agree
The Chief Product Officer & Co-Founder for the Interdax Brokerage, Jose Llisteri agreed with David Watson and Evgen Verzun. He strategies to reports that cryptocurrency investors can implement derivatives, ensuring that their profits remain sustainable through volatile markets. This means holding a position with a cryptocurrency like Bitcoin for prolonged periods. Investors engaging with derivatives can use them for hedging their funds as well, enabling for a magnitude of investment options to return. Challenges will apply when determining the best moment to go long or short with BTC. Reducing the associated risk with investing during COVID-19 is becoming a significant priority for investors. Jose Llisteri believes that derivatives are an effective strategy to mitigate related exposure to fluctuating markets.
Many circumstances implicate the outcome of derivative trading. Potential profits are acquirable but are challenging to obtain. Incidents in daily lives are forcing numerous businesses to shut down, including cryptocurrency exchanges and brokerages. It’s forcing unprecedented changes to how global financial markets are operating, with some flat out closing their markets for a prolonged period.
David Watson doesn’t believe that changing to daily life should create high anxiety or fear with regular trading. He mentioned: “Preparing for volatile times by proactively determining trading psychology can go a long way in helping traders stay calm and profitable during a crisis. The Fear and Greed Index is a great indicator of market opportunities for traders.”
Those sentiments concluded with the statement: “In the traditional sense, a lot of fear will drive stock prices low and in times of greed prices are driven high. It goes the same for crypto investments when fear is high; it’s an indicator for buying opportunities. When greed is high, everyone is buying, and prices are driven up. Looking at the Fear and Greed Index for a certain cryptocurrency can help you determine the best buying times.”