The financial markets are not an exact science, since most of the traders would be millionaires, and this is far from being the case. Even the best robots of Wall Street fail when there is turbulence in the bags. Anyway, there are some “secrets” that if they work and can be applied to the cryptocurrencies, in particular the Bitcoin. As is of public knowledge, the Coronavirus is causing havoc in the financial markets-traditional, that are directly affecting the cryptocurrencies, although these are recovering in the last few hours. The main index of Wall Street, the Dow Jones, has lost in the last month 32%, according to data published on Yahoo Finance. Graph of the Dow Jones for the last month. Source: Yahoo Finance.
Secrets of the financial markets traditional
The first thing to understand in the financial markets traditional is that the money is constantly moving from one place to another. For example, when the Wall Street stock plunge 10%, the investors withdraw the money from the shares they buy other financial assets, which are known as refuge assets, or book value, which I will mention below:
1 – treasury Bonds
The treasury bonds of the united States are some of the assets shelters for excellence, as the country has always honored the commitment of its debt with investors. This is because the FED can inject large amounts of dollars at any time, or in more simple words always pays. The problem with this investment is that practically does not generate returns, but at least preserves the value of money in times of uncertainty, such as the one you are currently living.
2 – Gold
Other asset shelter par excellence is gold, because it has shown throughout its history that it is reliable to protect the value in hard currency (Dollar, Euro, etc.). Although it is still far from its historical high of 1900 dollars, reached back in the year 2011, it is still a good asset refuge to have in any investment portfolio in a time of financial turbulence. In the graph below you can see the evolution of the gold in the last 20 years. Graph of Gold over the last 20 years. Source: Yahoo Finance.
3 – japanese Yen
The currency japan is one of the few currencies that is used as the active refuge from the turbulence of the financial markets. This is due to the country’s east has a healthy financial market, and enjoys credibility. In the graph below it can be noted that the first adverse movements of the bags of the world, the Yen acted as a value shelter. But then the investors returned to the greenback. This is because they used the u.s. currency to buy treasury bonds. How everything is related or seems to me?. Chart of the japanese Yen by 2020. Source: Yahoo Finance.
4 – U.S. Dollar
Could not miss in this list the us dollar, which despite having tons of greenbacks by the world, remains the reference currency in the planet. For now, there is no fiat currency that can make you shady, I repeat once more, for now.
5 – Bitcoin
A little more than 10 years entered a new player to the elite group of the reserve assets of value, thanks to the mysterious Satoshi Nakamoto. We are talking about the Bitcoin, the criptomoneda that is putting in a check to the financial markets traditional. 11 years ago, you could buy a Bitcoin for just pennies on the dollar, at the time of writing its value exceeds the 4 ounces of gold (US$ 6.250). Some accuse the Bitcoin that have a high volatility, which does not qualify as an active shelter. Perhaps Wall Street is not volatile? Give again a look at the chart above of the Dow Jones. In the graph below you can see the behavior of Bitcoin in the last few years. Graph of Bitcoin from 2014 to the present. Source: Yahoo Finance.
How do we join the pieces?
Now, already, listed assets shelters, how can we use this information to our advantage?. There is no formula written, but one of the great secrets of the markets, as mentioned before, is to take the money from one side and move it to the other. As it says there: “money never sleeps”. Below are A few useful tips for trading to short term, taking advantage of these “secrets of the markets”: If the future of Wall Street operate with negative trend (before opening bag), it is very likely that the refuge assets tend to appreciate (Yen, Dollar, Gold and in some cases the Bitcoin).On the contrary, if the future operating with strong gains, it is probable that at the opening of the bags the refuge assets tend to depreciate, which would be a good opportunity to place sales orders. This is just the beginning, there is much much more to take into account in this jungle of financial markets. Attention must also be paid at the close of the asian markets, especially the stock exchange of Japan and Shanghai. Without forgetting, of the european stock markets, especially those that have a high volume of trading as the German, Spanish, and French.
How to harness the secrets of the markets in Bitcoin?
If we take into account to Bitcoin as an asset haven, a possibility is to buy BTC when push comes to shove, as is the case of markets in these moments. Now, at what point to buy? If you think the long-term investment buy at this level can be a “bargain”. On the other hand, if you are a trader in the short term, you must wait for a support key to enter, or take indicators of the financial markets-traditional, as I explained earlier.
To take into account…
To finish, I remember that all of the information from this post you should take it only for educational purposes, inviting you to investigate and deepen the aforementioned topics. If I managed to wake up a little your curiosity as you move the financial markets traditional and their influence on Bitcoin, I not written this post in vain. What were helpful to you these secrets of the markets? Let us know in the comments box.