Summary:
• $5.55 billion in cryptocurrency positions were liquidated in April due to speculation surrounding Bitcoin’s halving.
• Rossmarie Davila offers advice on strategic investing and navigating crypto market volatility.
• Davila recommends a cautious investment strategy, especially during periods of market volatility.
In an extraordinary display of market volatility, the cryptocurrency market witnessed a staggering $5.55 billion in long and short positions being liquidated in April. This was mainly triggered by the ongoing speculation surrounding the Bitcoin halving event.
This turbulent period provides investment practices with key insights and opportunities for strategic adjustments.
Bitcoin volatility before halving
Veteran crypto finance consultant Rossmarie Davila provided insights to CoinDesk on best practices for navigating these turbulent times.
When constructing a portfolio, she recommends setting clear short-term and long-term goals for each asset. Davila stressed the importance of a clear strategy, as Bitcoin’s inherent volatility requires a nuanced approach.
In fact, this year’s halving has significantly affected the Bitcoin market, pushing the price to an all-time high of $73,737 in March. However, the following weeks brought volatility, with Bitcoin experiencing a massive price correction of 20% and some altcoins falling more than 70%.
Given the high volatility, Davila strongly advises new entrants into the cryptocurrency market to proceed with caution.
Davila told reporters: "The best thing to do is not to panic and not to buy frantically because Bitcoin is very volatile. I think a good suggestion is to allocate a fixed amount every month and buy at the average price, and at the same time, see how you feel about these high-volatility investments. With a clear strategy, market noise should not cause me anxiety."
She also noted the psychological dynamics involved, especially after the halving. The reduction in Bitcoin supply will inevitably lead to an increase in price due to demand, which is a classic supply and demand dynamic. If the portfolio is in line with expectations, it is recommended to maintain your direction.
Otherwise, Davila suggests that investors should consider reallocating or adding to their holdings after a price correction, but never consider entering the market during a peak. It is important to remember that the cryptocurrency market is affected by many external factors and it is difficult to predict with certainty.
Nonetheless, following previous Bitcoin halvings, prices typically stabilize after an initial surge as capital flows into altcoins.
Managing emotions and expectations
When discussing the impact on investors, especially newcomers, Davila highlighted the potential psychological burden. The reduction in Bitcoin supply may cause anxiety among newcomers, which is exacerbated by frequent sensational news reports. This "fear of missing out" (FOMO) emotion may lead people to make ill-considered decisions.
She noted that market sentiment, as measured by the Fear and Greed Index, is currently showing a "greed" state, suggesting that market valuations may be overvalued and a correction may be imminent. Even with the Bitcoin halving event and the launch of a spot Bitcoin exchange-traded fund (ETF), Davila suggested that "the analytical approach should remain the same."
Finally, she discussed strategies for different investment horizons. For example, for speculative short-term holdings, she believes it is crucial to utilize reputable platforms with large daily trading volumes and user engagement.
For long-term holders, safe storage in a cold wallet is recommended.
As the discussion around cryptocurrencies continues to evolve, Davila believes that Bitcoin’s utility as a medium of exchange and its broader acceptance as a legitimate financial asset will continue to grow, especially as the regulatory environment adapts and changes. #加密货币清算 #投资经验教训
