- The end of QT will favor risk-on assets, including Bitcoin.
- Several factors led to the sustained decline in Bitcoin price.
- Current market conditions favor breakouts over the knife-catching trading strategy.
The Coinbase Institutional crypto analysis platform favors breakout trades over knife-catching techniques under the current Bitcoin market conditions. In a recent post on X, the platform highlighted the key factors surrounding Bitcoin’s current price trajectory, noting why a knife-catching technique may not be the best approach for investors at this time.
Related: Bitcoin Technicals Signal $83K ‘Bear Trap’ Before $155K Breakout; BTC Inflows Hit $732 Billion
Ending QT Favors a Bitcoin Rebound
According to the analysis, the Federal Reserve is about to return to the bond market following the end of quantitative tightening (QT), which could end the drain of cash from the markets. Such a scenario typically favors risk-on assets such as Bitcoin and cryptocurrency.
However, before going bullish on the crypto market, the analysis firm highlighted the main reasons behind the latest BTC dump, including the breaking of major bull market support bands and options traders leaning bearish.
The platform also noted that OG whales resorted to a prolonged BTC selling spree, alongside large outflows in spot Bitcoin ETFs. These factors, in addition to a pause in Direct Access Treasury (DAT), cumulatively led to the sustained decline in Bitcoin’s price.
How to Approach the Current Bitcoin Market
In the meantime, following the ending of QT by the Fed, the crypto market is likely to experience a notable rebound. However, Coinbase analysts have asked users to take a cautious approach when re-entering the market. As mentioned above, the group suggests that traders avoid “Knife-Catching” techniques.
For context, the knife-catching trading strategy involves entering the market during sharp price declines. Traders use this technique when they anticipate rebounds, which could deliver notable profits. However, it could turn out to be a high-risk venture, particularly during an extended price decline, leading to significant losses.
The breakout system favored by Coinbase Institutional involves buying cryptos after confirmed rebounds. Such a strategy requires traders to wait for the price to break above resistance before entering the market, with the hope of riding the trend to higher levels.
Related: Bitcoin Price Prediction: BTC Stabilizes Above Support as Open Interest Climbs Again
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Source: https://coinedition.com/coinbase-wait-for-bitcoin-breakout-as-fed-ends-qt/