Let's learn about the best trading strategies during crises and what causes the nuclear effect on markets and why cryptocurrencies are shaking?
Mutual Attacks: Israeli strikes on Iranian nuclear facilities (such as Natanz) and the assassination of leaders and scientists, along with the Iranian response to Tel Aviv and Haifa, triggered a massive sell-off.
Shocking Numbers:
- Liquidation of $1.2 billion from stressed positions in hours.
- Ethereum's collapse of 11% compared to 5% for Bitcoin.
✔️ The Psychology of Geopolitical Events and Their Immediate Impact on Markets
Cryptocurrency markets react instantly and sharply to unexpected geopolitical events. Military escalation, as seen in the conflict between Israel and Iran, leads to a fear-driven sell-off, causing rapid price declines and widespread liquidation of leveraged positions.
For example, Bitcoin experienced a decline of nearly 5%, while Ethereum dropped by 11% following this escalation, leading to the liquidation of over $1.2 billion in market positions.
This quick response reflects a state of "risk-off" that drives investors to abandon volatile assets and seek traditional safe havens such as gold and the US dollar. However, this collective panic creates what is known as "market inefficiency" in the short term, where prices temporarily detach from their intrinsic values, opening the door for strategic investors relying on objective analysis rather than emotional reactions.
🟢 Historical Analysis: Market Cycles and Recovery After Crises
Historically, financial markets, including the cryptocurrency market, have shown remarkable resilience and the ability to recover after geopolitical shocks. The initial impact is often sharp but short-lived, as markets start to absorb the event and reassess assets based on their long-term fundamentals. Historical patterns indicate that markets not only tend to recover but often achieve significant gains in the months following a crisis.
This phenomenon depends on market cycles driven by multiple factors, including investor sentiment, liquidity, and technological developments. After the initial sell-off, investors waiting for low entry points enter the market, creating buying momentum that supports the recovery process.
Understanding these cycles allows investors to view current declines not as losses, but as strategic accumulation opportunities.
🟡 Dollar-Cost Averaging (DCA) Strategy: Turning Volatility into Opportunity
The Dollar-Cost Averaging (DCA) strategy is an effective tool for managing risks in volatile markets, as it reduces the impact of entering at a single price point and alleviates the psychological pressure associated with trying to time the market bottom. The strategy involves dividing the investment capital and distributing it across periodic and regular purchases.
An advanced version of this strategy can be applied by identifying specific entry levels based on technical analysis:
1️⃣ First Entry (DCA 1): At key support levels or previous resistance areas that have turned into support. These areas often experience strong buying interest.
2️⃣ Second Entry (DCA 2): At Fibonacci retracement levels, specifically the 61.8% level, which is considered the "golden ratio" in technical analysis and represents a potential strong rebound area.
3️⃣ Third Entry (DCA 3): In deep liquidity areas or "demand zones" that represent the last strong line of defense before a larger price collapse.
This structured approach ensures building an investment position at a lower average cost over time, enhancing potential profits when the market rebounds.
Technical Market Overview and Promising Cryptocurrency List
Bitcoin (BTC) Analysis: Bitcoin currently stands at a critical technical crossroads. Future movement depends on how the price interacts with the following levels:
⬆️ Bullish Scenario: A rise requires confirmation by closing above the $104,300 level to absorb the current selling pressure. The stronger signal for the beginning of a new upward wave is a weekly close above the pivotal resistance level at $107,500 (the current price is approaching this level), and breaking these levels could pave the way for testing previous historical peaks.
⬇️ Bearish Scenario: Breaking the support level at $94,000 could lead to a deeper decline. The more dangerous level is $86,400, as breaking it may indicate the end of the current upward trend in the medium term.
Investment Framework and Risk Management
Success in cryptocurrency trading during geopolitical crises requires a strict framework combining technical analysis, psychological discipline, and risk management.
🟢 Best Practices (Do's):
1️⃣ Diversify Your Portfolio: Spread investments across different assets (both digital and traditional) to reduce risks associated with a specific geopolitical event.
2️⃣ Monitor Trading Volumes: An increase in trading volume at support levels is a strong signal of buyer interest and can confirm the validity of the support level.
3️⃣ Set a Clear Plan: Determine entry and exit points, profit targets, and stop-losses before entering any trade.
4️⃣ Commit to the Plan: Avoid making emotional decisions based on breaking news and media noise.
🔴 Common Mistakes (Don'ts):
1️⃣ Full Capital Investment: Avoid investing all capital in one go, especially during periods of high volatility.
2️⃣ Emotional Trading: Fear and greed are the biggest enemies of traders. Decisions should be made based on data and analysis.
3️⃣ Ignore Technical Analysis: Ignoring key support and resistance levels can lead to significant losses.
By following this framework, investors can turn periods of uncertainty into strategic opportunities for sustainable returns.
Now is not the time for fear... but for preparation.
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List of rising cryptocurrencies that will explode after the storm
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