Well, folks, the global quarantine is reaching past the one-month mark in most of the world, and markets are–well, weird.
Indeed, the longer that the crisis drags on, it seems that uncertainty seems to continue to grow; some estimates say that the lockdown could continue for several weeks, while others project that the coronavirus quarantine will last for months into the future. The full extent of the economic damage that the quarantine is unknown and impossible to predict.
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Therefore, investors and traders in all markets are faced with an inconvenient truth: the only thing that’s constant is change; higher-than-usual volatility may be the new norm.
However, for cryptocurrency traders, the corona-related volatility may not be quite as abnormal as it is for traders in other markets. Still, Timothy Sykes, chief executive officer of Millionaire Media and author of An American Hedge Fund, told Finance Magnates that the most important thing to remember is that the current crisis is unlike any other financial crisis that may have taken place in the past.
Therefore, traders shouldn’t be doing “the same things [they]’ve been doing before,” he said. “[Traders] have to recognize that this is likely the end of an 11-year bull market. What worked in that market won’t necessarily work going forward.”
And they told me Bitcoin was a risky volatile asset…
(Plotted in log charts so % gains/losses are proportional within each respective sparkline) pic.twitter.com/qxC1xF8cay
— Willy Woo (@woonomic) April 7, 2020
Jack be nimble, Jack be quick
At the same time, however, vigilance and the ability to act quickly may be more important than ever: “using the cycles to your advantage is the main idea when uncertainty is high,” he explained.
Therefore, this “may be the right time to make faster moves, respect the trend, go short, and exit quickly if you’re in a losing trade,” Waslen explained.
Timothy Sykes also suggested that time is of the essence: “the number one tool you could have is being nimble,” he said.
“A few years ago, we wouldn’t have been able to get in and out quickly or cheaply,” he said. However, now, “a lot of brokers are moving to free trading commissions.”
Sykes believes that this is the time to take advantage of these commission-free trades: “you can go in and out. You don’t have to go all-in, you don’t have to buy and hold, you don’t have to stay stuck to one conclusion or thesis,” he said.
Indeed, “[traders] have to adapt and recognize this is a different time,” he said. “A lot of people just go down with the ship and try and figure out what went wrong.”
Hodl with caution
If being quick isn’t an option, however, there’s always ‘hodling’: a term that simply describes the act of buying and holding onto cryptocurrency for an extended period of time.
However, Waslen said that even hodlers should proceed with caution throughout the coronavirus: “as part of an overall strategy, HODLing assets may net gains in the long haul,” Waslen said. “But during times of crisis, there are more opportunities for traders to profit by trading trends and cycles.”
“One example of buying and HODLing during a crisis might be entering a position on a cryptocurrency that has just experienced a large drop. The low price can potentially result in significant gains. That being said, it’s impossible to find the true bottom, so making an educated investment and holding for a long period of time may do very well. Just be prepared to stomach some turmoil and perhaps be prepared to dollar cost average.”
Timothy Sykes also said that beyond crypto, “buying and holding of stocks may be a good strategy, but maybe alter it to buying and holding of cash, or gold, or euros.”
In other words, “stay liquid.”
Though many in the cryptocurrency industry are particularly wary of the potential for USD inflation at the moment, Sykes argues that “cash is also an asset” that should be used carefully during this time.
“A lot of people want to invest in something, but they forget you can stay liquid and perhaps wait a few days or a few weeks,” he said. “This whole crash has happened for the past few weeks and a lot of top commentators and top profile managers mistakenly said that ‘cash [is] trash.’”
However, “this is what is key to understand,” he said. “Individuals are not like hedge funds or mutual funds. You don’t have to stay fully invested at all times.”
Alternative ways of earning with crypto
However, if trading or even holding onto cryptocurrency simply seems too stressful or dangerous at the moment, Waslen suggested that this may be a good time to look into other methods of earning through cryptocurrencies.
“Unlike traditional stock markets, the crypto industry provides numerous ways for traders to earn cryptocurrencies,” he said. “They can Earn crypto playing video games, making price predictions on a platform like HedgeTrade, and even by simply staking coins and earning interest.”
Indeed, “these avenues of earning should be taken advantage of especially now when prices are low, and volatility is high. It’s a great way to hedge during a crisis like Coronavirus; no one really knows what will happen, but earning extra crypto has no downsides.”
Jose Llisteri also pointed out that, for investors who have the means, “arbitrage can also be more profitable in times of high volatility as quotes for different exchanges may vary by higher amounts.
“Scalpers, who enter many trades over very short time periods, also benefit from fast-moving markets as there are more opportunities,” he said.
What are your coronavirus trading strategies? Let us know in the comments below. None of the content contained in this article constitutes investment advice.
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