Bitcoin continues to trade at a tight range despite it dropping 2% with the stocks last week. Although it fell below the crucial resistance $10,000 briefly, it quickly bounced back and is now consolidating at $10,700.
Regardless of some sharp drops and increases, bitcoin volatility is rather low. According to Coin Metrics statistics, the 180-day returns volatility for bitcoin is down 41 percent so far in September.
September is usually considered the worst month of the year for stocks on average. One particular theory is that a large number of investors who took a vacation during the summer would exit the positions they planned to sell after returning from work in the fall season. Naturally, this would result in massive selling pressure and drag down the overall market.
However, this September we are able to summarize some solid reasons for the free fall of the global market.
- COVID-19 makes a strong comeback
As medical professionals predicted, COVID-19 infections and deaths spike when we enter the fall season. Restrictions are launched in several European countries, while the UK economy has officially entered a recessionary phase. In response to the gloomy prospect of the global economy, investors have turned on their “risk-off mode” and other markets such as oil and precious metal saw steep decreases in the past few days.
- US dollar regains strength
Since investors turn on their "risk-off" mode, the US dollar once again gains popularity. The rally of the dollar index makes investing in gold and bitcoin more expensive. Besides, U.S. congress fails to reach a consensus of the next stimulus package, which is believed to significantly enhance the liquidity of the market and push up gold and bitcoin.
Potential risks of factors such as the contentious election and inflating valuation of tech stock also scare away many investors. In the short-term, bitcoin still has room to fall should the stock market tank or any incidents arise due to the contentious presidential election, and we will experience bitcoin’s great volatility again then. Any good news from the research of COVID-19 vaccines or stimulus packages will give gold and bitcoin a boost.
Here are two options worthy of trying during the crypto winter:
Option 1: A Wallet Designed for Traders and HODLers
You might want to continue to hodl your BTC and wait for the market to recover. However, as we don’t know how long it will be, meanwhile you could consider storing your BTC into an interest-bearing wallet, where your deposit could gain up to a 30% annualized interest rate.
Option 2: Managing Trading with Less Risks
You could benefit from the downside by shorting bitcoin. Using leverage, traders can open a position X times more than their actual capital. Bexplus, a leading cryptocurrency leverage trading platform, even offers a 100x leverage. Even at times of great volatility, you can generate profits with the help of Bexplus. And its Stop Loss & Take Profit options could help you lower the risks and lock in profits.
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