Bitcoin's recent positive news may lead to more market volatility

Yesterday morning, the Federal Reserve announced its decision to keep interest rates unchanged and tend to start raising interest rates in 2022. This decision caused gold to fall back to below 1770. Bloomberg commodity strategist Mike McGlone also said that the expectation of the Fed's interest rate hike has caused gold to experience outflows, and more investors have begun to favor Bitcoin and Ethereum. The US SEC may approve the Bitcoin futures ETF in March or April 2022, which will be a very significant positive.

The role of ETFs can be referred to the historical trend of gold. Before the launch of gold ETFs in 2003, the market's bullish expectations led to a 76% increase in gold prices. After the start, gold prices fell by 9%. In the following years, a crazy bull market occurred, with gold prices soaring from $420 to $440 to $1,900. This is the effect of ETFs. ETFs bring lower threshold investments and more investors. There is reason to believe that Bitcoin futures ETFs will once again be sought after by the market.

As an investor, buying spot Bitcoin is a wise and prudent choice. For contract investors, it will mean greater risk and higher returns. Because Bitcoin futures ETF is a paper contract, the number of short-selling Bitcoin contracts can be much greater than the actual production of Bitcoin, which will cause greater downward pressure. For contracts, the shock will be more severe.

In order to ensure the safety of funds, the principal must be dispersed into multiple, small investments. The less money invested, the safer it is. In a violently volatile market, the advantage of high leverage is reflected. Under the condition of unchanged increase and income, the higher the leverage, the less the principal required, and the less the loss amount of liquidation. The 500x leverage of BFX Contract Exchange is more like a multiple-choice question, long or short, two directions, if you do it right, you will make money, if you do it wrong, you will be liquidated and stop loss. In extreme market conditions, if you do it right, you will get rich instantly; if you do it wrong, you will only lose a small amount of principal and will not hurt your vitality. 20x leverage is more suitable for wealthy investors because the risk of liquidation is lower, but once the fluctuation is too large, the amount of loss of 20x leverage will be much higher than 500x when the liquidation occurs.

As for the current market, with the impact of policies on the trend of Bitcoin, there are more positive information than negative information, so in the next period of time, we can expect Bitcoin to rebound after sideways trading. The trend of gold will also be a good reverse reference. The above is from BFX exchange analysts and is for reference only, not investment advice. (Contributed by netizens)