Bitcoin Catches Coronavirus: How to Survive The Crypto Market Bloodbath | Market Experts Explain

´╗┐When are we going to see this bloodbath to finish? I don’t think we are near that space now. People are saying, why is gold down? Surely that’s a safe haven. Well, no. When the baby gets thrown out with the bathwater… When it comes to bitcoin price, I’m happy that it is dropping. You know why? If it touches that three thousand seven hundred mark again, I’d be a buyer again on that. Hi, everyone. I’m Giovanni. Welcome back to our show. Today is a very dramatic day for global markets. To figure out what is going on, we talked to chief market analyst at AvaTrade, Naeem Aslam and co-founder at EzeeTrader, Charlie Burton. In the past 24 hours, we have been witnessing a bloodbath in all the markets. We have been witnessing bitcoin falling by almost a quarter. What is going on? Thanks for having me. Look, Bitcoin has seen the biggest drop today since 2017. And the reason that drop is happening because investors are immensely anxious about the market reaction, what is happening in the traditional equity markets. We all know that both institutional and retail investors have been very active in the last year or so in buying Bitcoin. Now because of this massive plunge in the equity markets they have no other option but to liquidate some of their positions in in other assets such as Bitcoin and of course, gold is seeing massive pressure because of that. In order to save themselves from margin calls in traditional assets. That is the one particular reason that I can think of that, why we’ve seen this massive plunge in the bitcoin price. Otherwise, right now, this is the moment that we are going to check. The fundamentals of bitcoins are going to be put to test because monetary policy around the globe which is utilized, which is by implemented by central bank is going to be tested. So if that policy is really going to remain in place, now is the time. In the coming quarters we’re going to really see enormous amount of stress test with respect to that monetary policy. So we shouldn’t be seeing this sort of a massive sell off in the Bitcoin price. In fact, I believe that we should see the massive surge in a Bitcoin price, but that’s not happening. The only reason and the actual factual reason that I can share that with you is investors are liquidating some of their positions and putting that money in order to cover the margin call. But when it comes to bitcoin price, I’m happy that it is dropping. You know why? If it touches that three thousand seven hundred mark again, I’d be a buyer again on that. Ok. We know what the stock markets are selling off. The equity markets are selling off because of the economic impact of the corona virus spreading worldwide. But people are saying to me, why is gold selling off? Why is bitcoin selling off? Because up until recently, you know, if the equity markets have been coming down, sometimes we’ve seen the likes of Bitcoin doing quite well. But it is just like I think when I was last doing a call with you guys, in January, when everybody’s selling everything, everyone is losing on their equity portfolios, then end up selling what they’ve been doing well on to offset some of their losses. So that’s why I mean, gold is down massively today and people are saying, why is gold down? You know, surely that’s a safe haven. Well, no. When the baby gets thrown out with the bathwater, when the markets get to this sort stage. And we saw this in the financial crisis back in 2000 and 2008, 09, 10 for periods where gold actually would have periods where it pulled back because that intense moments when everybody’s selling then or their equity portfolios are going down, then they need to cash out of some of their profitable positions. And that’s what we’re seeing with gold and like you said, Bitcoin’s down today as well. And when do you think this bloodbath will be finished? I think there is a lot more to go. Look, you know, if you had to speak in off a one day percentage moves, right? So look at the percentage move right now in front of you. This is the Stoxx 600. We have not seen these sort of things. But one day plunge in the market going back all the way to nineteen eighties. Footsie 100? Massive one day plunge since 1987. Look at KAC 40. Similar message. But when you look at the Footsie, Footsie MIB, the Italian index. I’m not seeing that sort of a selloff in Footsie index, which is insane. You know why? Because it is Italy which is under enormous amount of pressure. It is Italy which is under a lockdown condition now. And it is Italy where we going to see the massive banking crisis. We heard from Christine Legarde that she didn’t reduce our interest rate, but Germany came out and then they said, OK, you know what? We are going to take extraordinary measures, meaning they’re not going to run the balanced budget anymore. Again, going back to the other earlier conversation of testing the monetary policies by central banks, right? So, Germany is going to introduce massive budget spending in order to soften the blow of Coronavirus. Now, to answer your question, precisely when are we going to see this bloodbath to finish? I don’t think we are near that space now. Yes, the massive plunges that I have just explained to you over the charts, like Stoxx 600, Footsie 100, KAC 40. We could see some sort of a retracement because these plunges are, you know, unprecedented. Like I said, the last time we’ve seen any sort of a massive sell off at this magnitude, you have to go back or in the history all the way to nineteen eighties to 1970 in order to witness that. But overall, for investors perspective, I think I’m gonna hold my bullets because I’m still waiting for these markets to fall a lot more than what they are because we are still sitting at 25 percent correction from all time high. And I’m not a buyer until or unless I start seeing that 40 percent mark. Well, the global central banks, the central banks and the governments around the world, they’ve still got some armor, so to speak, some ammunition up their sleeve. So there’s still gonna be measures that will come in. And we saw the Federal Reserve last week make that unprecedented move of cutting rates ahead of next week’s Federal Reserve meeting, the FOMC meeting. So they’re gonna cut rates again next week. But there could be other measures. And in this environment, what I’ve been just been saying to my traders here today is that you’ve got to stay connected to what’s going on in the news, because at any moment the US could come out with something else. At any time. And then suddenly you thinking, well, hold on a second, the markets are all bouncing or rallying. What’s going on? It’s because maybe some is gone. The US government or the Treasury or the Federal Reserve come out with something. So but generally, this isn’t over, is it? We’re not in a containment stage at the moment. And the economic fallout is still there. Now, the markets are forward pricing. So they’re trying to already forward price in what is the economic fallout going to be. And that’s what we’re seeing and we’re seeing uncertainty in the markets, which is what’s creating this huge volatility. We can talk about what opportunities there are, but I don’t think that the equity markets are done yet. Now, don’t get me wrong, They could bounce at any stage and put in some good oversold technical bounces. But I very much doubt that the stock markets have made a low to share. I suspect if as the stock markets come down, bitcoin will fall further. Now, so when I was last with you, we were talking about Bitcoin have been having a nice run. So I’m just looking away at this chart at the moment. Bitcoin had been having a nice run in into January and into February and I was talking about Bitcoin doing a pullback, but I wasn’t expecting it to pull back this much, I must admit. But these are unprecedented times. These are, you know, beyond your standard deviation events. So most of the time we train within standard deviations. We know what roughly the markets do, the sort of volatility to expect. And we’ve now gone to this high volatility environment again, which we haven’t seen the equity markets since the financial crisis. We’re going to get a lot of the weaker hands. We’ll get cleared out of this. I still actually see the long term prospects for bitcoin, but this is great because this is going to see a lot of people throw in the towel and say they’ll say, I’m sick of trading bitcoin now I’m off. And that’s the way the markets work. It’s the same of the way that the equity markets work. And it always has been that way. Markets have good runs. Then they either have periods of consolidation where it bores investors out of positions or they have bear markets and that gets people out of positions as well. So I see this is a good thing. It’s a flush. Could it come back down, revisit 3000? Yes, it could. But I still see in a year, 18 months time, that’s where I see it gradually trickle its way back up. Ok. So talking about what you’re doing in this exact moment, how are you reacting to this situation? Like how are you managing your portfolio? Are you just waiting for things to go even worst or what are you doing exactly? We’re selling into rallies. That’s that’s all we’re going to do. Any dead cat bounce is an opportunity for you to sell the rally. Why? Economic data is gonna get even worse. And nothing is baked into the earnings like we discussed before. So this is an opportunity for you to sell into the rallies. But be mindful. The moment that we come close to any of those important 200 day moving average. Especially, let me give you a tip. E-mini futures or S&P 500 index already touched 200 day moving average. And every time we have touched the 200 day moving average over the last 20 years, I’m talking about two arrow here. The prices have bounced back sharply up. So I think I’m expecting that bounce today, but I’m still not sure whether, you know, if this is the end of the selloff. I think we’re going to still see massive, massive drop from here. And in terms of a buying that opportunity. I think I’m waiting for the S&P 500 index to drop below the 200 day moving average by 20 percent. And then I’m going to come into the market with full force, with full ammunition and then start buying everything. Interestingly, I had shorted gold with some of our traders just a week or so ago, a week or so ago. When it was we put a gold short in and we have our reasons for shorting gold. When you would think that Goldman be flying higher. So, yes, I do have a number of different positions in the market, but interestingly, I’m not in the S&P or the Dow right now. I shorted the S&P fun enough right near the highs with some of our traders. But I came out long ago. And this is the reality. People think the professional traders, they get in, you know, like the S&P, I shorted it the highs and I’d still be in it right now the lows. And that’s just not the reality. I took what is now a tiny chunk of the market, but what seemed like a decent trade at the time. And now, you know, you think, ah, missed out a bit there, but we can’t capture it all. So don’t worry if you’re missing out because there’ll be another opportunity round the corner. These markets are moving fast. The best thing that people can do is manage their risk and just wait for the next opportunity. And don’t worry, if you’ve missed out on some. Cause there’s gonna be plenty more opportunities coming. Yeah. So as far as my trading is concerned, yes. A lot of trading in likes of euro dollar as well. Don’t mind trading that because it’s the world’s most liquid currency. So that’s where as our fellow bitcoin. I do think that in the long term it’s gonna be fine. But who knows in the short term because like I said, the baby gets thrown out with the bathwater and it could still come lower. If the equity markets do still go lower. If you had to give a piece of advice to an average trader who is trying to figure out what to do, how to best profit from this situation of immense crisis, what would that be? Well, first of all, I don’t give out advice so I can share suggestions. So that is if you are an investor, hold your horses for the time being. The markets let this dust settle a little bit and then walk into it. Because remember, we have two strategies. This is your support zone, is being built up a line. This being your dollar line. Right. My kid falls like a knife in this in this zone. Right. You can buy it right here. Then you have very, very skilled traders who are going to find that bottom. Then you have investors who are slightly risk averse. They want to see, they want to buy it when the market comes out of their support zone. So for retail investors will not scale, wait for that moment, wait for the price to come out of that support zone. We still don’t know where the bottom is in the market. What we know that we are willing to buy up to 30 percent or up to 40 percent. And then that’s what the discount is on. Come on. You’ve got to buy it at that particular point, because this is the closest thing that we have seen near the Bitcoin hype. When that ICO hype happened. Look at the activity at brokers level. The volumes are going through the roof because everyone is trying to take, you know, some piece of the pie right now. On the other hand, if you are a day trader, this is the best time for you to get involved. Because that one thousand percentage point has become a norm. Even today we’ve seen second break in the S&P 500 index. During this particular week there has been two different occasions when the S&P 500 has broken its seconds. Right, meaning more than 7 percent move on the market. So to summarize, passive investor, wait. Day traders, get involved in it. Enormous amount of volatility. Okay. All right. There’s different parts of what my personal strategy is. One is we have to manage risk. I’m seeing lots of people blowing their accounts out there. I am speaking to my regulators for my fund and they were talking about how many people are blowing up because they’re not using things like stop losses. I constantly go on about this. We’ve talked about traders. But if you’re gonna trade about stock losses in this environment and if you can, a nightingale in two positions adding to losing positions, you’re gonna get blown out of the water. So please respect your risk management risk a maximum of 1 percent per trade. That would be the first piece of advice that I could give as far as a strategy is concerned. Reduce your position size and have wider stops than you’d normally have. The market like a wall said the volatilities expanded by great to a great extent. So we’ve got to have wider stocks in order to account for that volatility. The other thing from a risk perspective is be really careful. You want to treat stock indices. Be really careful. The S&P keeps on getting sharp. The S&P in the Dow because they’re hitting the circuit breakers. So you might well think you’re going to capture a bounce and then all of a sudden the circuit breaker kicks in. You get stuck in a position and then the market reopens another several hundred points lower than the way you were. So sometimes you just have to accept that certain markets are untrainable. If you want to manage your risk. So it all comes under the banner of risk that that was name Islam and Charlie Barton. Thank you, guys. Don’t forget to subscribe to watch channel with more updates on their turmoil engulfing the global markets. Cointelegraph. Like, subscribe and hodl.