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BitcoinUSDCrypto

The crypto markets come alive with volatility

Chris Weston
Chris Weston
Head of Research
Apr 23, 2021
Talk among traders is that proposed tax changes from the Biden administration to wealthy individuals is causing ripples (excuse the pun) through the crypto universe.

It speaks to quasi-regulation, a factor that could change the game and something the market is rightfully nervous about. However, this news flow alone is not the factor that derails the project in any capacity.

Looking at the volatility and movement in Crypto today there are a few points that jump out.

1) While the percentage changes seem huge, for those who have not been brought up solely on Crypto and digital assets, and have cut their craft trading more traditional financial markets, these moves seem outrageous. However, one thing is clear when we’re talking about Crypto – our perception of movement must adjust accordingly. When a market can move 1,262% in a year, what's a 10% sell-off between traders?

2) When we see this sort of range expansion in price and the extent of intra-day reversals playing out, it re-enforces the idea that CFDs are one of the best vehicles for retail traders to capture opportunity in Crypto. Notably, as CFDs offer the flexibility to profit from moves higher and lower in price, and typically the hold times for positions are hours not weeks. Pull up a 5-minute chart and see the conditions for scalpers and ultra-short-term traders to trade – with top of book spreads coming in, the ability to trade short-term has greatly improved of late.

24_04_2021_Crypto.png

(Source: Tradingview)

3) Flip to a daily chart in Ethereum and Bitcoin cash – price in many of these markets have been printing lower highs, but there's no shortage of buyers and the buy-the-dip crowd is still firmly in the mix - the resilience of the bulls is there for now. That said, the trend in Bitcoin is lower now and a close through 50,305 (the 25 March swing low) would heighten the probability of a move to 44000/40000.

It promises to be an interesting few days for Crypto traders and a re-run of last Sunday’s volatility is a real prospect and our weekend trading in Crypto CFDs allows for traders to capture the volatility and opportunity, and manage the risk in open positions with greater control. Take the time frame in, watch the flow and get ready to trade the opportunity.

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