The company sees potential in purchasing during this downturn but emphasizes the importance of a strict stop loss.
On Aug. 15, Bitcoin experienced a significant drop of more than 10%, reaching a previous resistance level, now turned support, of $25,000.
Since that time, it has hovered around the $26,000 mark, leading many in the trading community to predict further declines in the near future.
However, Markus Thielen, Matrixport’s chief of research and strategy, offers a different perspective.
“With tight stop losses, we would be long Bitcoin, expecting lower treasury yields and a rally in U.S. tech stocks,” he said, anticipating a 10% downturn by summer’s end, which has now occurred.
Thielen believes that with the right risk management strategies, traders might consider a long position once more.
Thielen also advised traders to keep a close watch on Bitcoin’s price, especially if it falls below $25,800, as this would activate the stop loss for those holding a long position.
At the time of the report, Bitcoin was valued at $26,000, marking an 11% decrease for the month.
For context, a stop loss is a predetermined order to buy or sell, aimed at minimizing losses if market prices don’t favor the trade.
In related financial news, the U.S. 10-year Treasury note’s yield has seen an 18 basis point reduction over the last week, settling at 4.18%.
This decline provides some relief to riskier assets, including cryptocurrencies.
Typically, when these yields decrease, investors turn to higher-risk options like tech stocks and cryptocurrencies.
However, when yields increase, there’s a trend to shift investments from riskier assets to more stable fixed-income securities.
Notably, yields had spiked earlier in the month, reaching their peak since 2009.
Thielen also commented on the potential for these yields to continue their decline, especially as the U.S. inflation rate begins to stabilize.
He mentioned, “The U.S. macro backdrop continues to be highly favorable to risk assets, as we pointed out in December 2022.
Inflation will continue to fall and the Fed appears to be on hold for the time being, that’s what Fed Chair Powell implied last week, in our view.”
Produced in association with Benzinga