5 crypto trading strategies to ride momentum

Managing market moves during election cycles and focusing on long-term investments requires preparation and knowledge to thrive. Historically, election results can move markets. Additionally, the months from October to December have yielded positive returns in the past, suggesting a potential catalyst to fuel renewed investor interest and favorable conditions for the price of bitcoin (BTC).

• End-of-Year Rallies (Q4): Based on past data, bitcoin experiences significant price increases in Q4, particularly in November and December. These spikes are often linked to increased buying around the holidays or year-end optimism. This is evidenced by major bull run peaks in December 2017 and 2020.

• Start-of-Year "Recovery" (Q1): Following typical price consolidations or corrections at year-end, BTC tends to recover or rally in January. This pattern is often attributed to renewed investor interest or portfolio rebalancing at the beginning of a new year.

• Summer Slump (Q2 & Q3): Bitcoin often slows or declines during the summer months, especially from May to July. This "summer slump" is characterised by lower trading volumes and increased volatility. However, exceptions like the rallies in the summers of 2021 and 2023 remind us that this isn't a hard rule.

• Altcoin and Bitcoin Season Cycles: In cycles where bitcoin performs strongly, altcoins may lag but typically surge during "alt seasons" following a bitcoin peak. These events often occur in short bursts rather than at fixed times, usually trailing BTC's rally by a month or two.

While these seasonal trends aren't guaranteed, they provide valuable context for long-term strategies. For example, if bitcoin performs well in Q4, one might anticipate a correction in early Q1 or consider building positions in preparation.

What big market events shook things up over the last month?

• Institutional Investment and ETF Inflows: A ton of money from big corporate players flowed into bitcoin ETFs, hitting $2.1 billion in just five days! This rush showed that institutional investors were feeling good about bitcoin again, which positively impacted its price.

• Renewed Market Sentiment and Investor Confidence: People were feeling optimistic, and that confidence helped bitcoin climb higher. With favorable macroeconomic conditions, advances in blockchain, and more businesses and financial institutions adopting crypto, investor optimism was on the rise.

• Historical "Uptober" Trends: October is famous for being a strong month for bitcoin, and this year didn't disappoint. Bitcoin jumped by 14.2%, from $63,327 at the start of the month to ~$72,300 by October-end.

• Regulatory Environment Stability: The regulatory scene was uneventful in October, providing a stable backdrop for bitcoin growth. When regulations are clear and supportive, it boosts investor confidence, which was obvious during this time.

• Political Factors with U.S. Elections: With the U.S. presidential election, market sentiment towards digital assets was abuzz. Pro-crypto vibes from candidates like Donald Trump are expected to lift confidence in cryptocurrencies.

• Market Correlation with Traditional Markets: Bitcoin's connection with traditional stock markets brought some ups and downs due to economic uncertainties affecting equities. If stocks rally, bitcoin prices might follow.

5 crypto trading strategies to ride momentum

What happens in the market impacts the trading chart. Keeping an eye on current events that could sway the market is key. Sure, fundamental and technical analysis matters, but having the right trading strategy sets you up for success. Picture this: You've charted the trend, and everything's going as you thought. How should you trade the market? Here are some ideas:

1. Momentum Trading on Bitcoin

With bitcoin making history trading at a new all-time-high above $75,000, traders can capitalize on this fresh momentum. Set entry price at key support and target take profit at key resistance level, as analysts predict continued bullish momentum fueled by institutional interest and ETF inflows

• Time Frame: Mid Term (Daily to Weekly)

• Indicator: Relative Strength Index (RSI) and MACD to identify entry points during upward price movements.

• Tools and Features: Strategic Limit Order and Loan

• How-to: Learn how you can increase your trading power here

2. Dollar-Cost Averaging (DCA)

Given bitcoin's historical performance and current stability, implementing a DCA strategy can help mitigate volatility risks. Invest a fixed amount regularly to accumulate bitcoin over time. This approach allows traders to benefit from potential price dips while averaging their purchase cost, making it a sound long-term investment strategy

• Time Frame: Mid Term (Daily to Weekly)

• Indicator: N/A

• Tools and Features: DCA Trading Bots

• How-to: Learn how you can setup DCA trading dots here

3. Swing Trading Altcoins

As bitcoin's dominance increases, altcoins often experience significant price movements. Identify altcoins that show signs of breakout patterns or strong fundamentals. Using swing trading strategies to capture gains from short-term price fluctuations can be risky given the volatility of altcoins and leverage.

• Time Frame: Short (Hourly)

• Indicator: Leveraging tools like Bollinger Bands and Moving Averages to time entries and exits effectively

• Tools and Features: Margins and Futures

• How-to: Learn how to deploy Trailing Stop Loss and Scaled Orders to manage risk.

  • A trailing stop-loss order automatically sells your position if the price drops by a set percentage. For instance, if BTC rises another 10%, you could set a 5% trailing stop, capturing additional gains while limiting losses if the market reverses. This strategy allows you to capitalise on the momentum of the trend.

  • Consider scaling into long or short positions. If you're willing to short BTC, scale into short positions with a stop loss above the current high. While riskier, this strategy can be profitable if you anticipate a correction. It also empowers you to be a price-maker, setting the price you want and letting the market come to you. Chasing the market (price) is often a high emotional endeavour that professional traders recommend against.

  • Learn how to set a scaled order here

Risk of trading the market with borrowed funds

While leveraging can potentially amplify your gains, it also comes with a higher level of risk. It's important to understand that borrowing to trade involves using borrowed money, which means you have to pay back any losses plus interest.If the market moves against your position, you may face margin calls demanding that you deposit additional funds or securities to cover potential losses. Failure to meet these margin requirements can result in your positions being liquidated.

Bonus strategies

4. Event-Driven Trading: Trade Around U.S. Elections

Monitor the U.S. presidential election closely, as the outcome could impact market sentiment towards cryptocurrencies.

Bitcoin hit 75,000 with Trump winning the election

A pro-crypto candidate winning could lead to a price surge in bitcoin and other digital assets. Traders should prepare for potential volatility around election dates by setting stop-loss orders to manage risks while positioning themselves for possible upward movements

5. Position Trading Strategy: Buy Low and Hold (Long-Term Holding)

If you're optimistic about bitcoin's long-term prospects, holding through highs and corrections might yield better returns, especially in volatile markets. Consider this if you believe the bull cycle still has potential.

Getting ahead in the cryptocurrency market means having a game plan and knowing your trading strategies. Whether you’re going for event-driven trading or playing the long game, it’s super important to keep an eye on market trends and adjust your positions as needed. Leveraged trading can be a goldmine for profits, but it also comes with risk, so make sure you're managing risk with tools like stop-loss orders. As the market keeps changing, staying informed and flexible is your best bet for boosting gains and minimizing losses.