Stop 'Catching Knives': Why Bitcoin Traders Should Wait for Breakout as Fed Ends QT

Source: CryptoNewsNet Original Title: Coinbase Institutional: Stop ‘Catching Knives’; Wait for Bitcoin Breakout as Fed Ends QT Original Link: A prominent crypto analysis platform favors breakout trades over knife-catching techniques under the current Bitcoin market conditions. In recent market analysis, 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.

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:

• BTC broke major bull market support bands
• Options traders leaning bearish
• OG whales resorting to a prolonged BTC selling spree
• Large outflows in spot Bitcoin ETFs
• A pause in Direct Access Treasury (DAT)

These factors cumulatively led to the sustained decline in Bitcoin’s price.

How to Approach the Current Bitcoin Market

Following the ending of QT by the Fed, the crypto market is likely to experience a notable rebound. However, analysts have advised users to take a cautious approach when re-entering the market, suggesting 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 strategy favored by market analysts 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. This approach prioritizes risk management and technical confirmation over timing the bottom.