When are we going to see this bloodbath to
finish?
I don't think we are near that space now.
People are saying, why is gold down?
Surely that's a safe haven.
Well, no.
When the baby gets thrown out with the bathwater...
When it comes to bitcoin price, I'm happy
that it is dropping.
You know why?
If it touches that three thousand seven hundred
mark again, I'd be a buyer again on that.
Hi, everyone.
I'm Giovanni.
Welcome back to our show.
Today is a very dramatic day for global markets.
To figure out what is going on,
we talked to chief market analyst at AvaTrade,
Naeem Aslam and co-founder at EzeeTrader,
Charlie Burton.
In the past 24 hours, we have been witnessing
a bloodbath in all the markets.
We have been witnessing bitcoin falling by
almost a quarter.
What is going on?
Thanks for having me.
Look, Bitcoin has seen the biggest drop today
since 2017.
And the reason that drop is happening because
investors are immensely anxious about the
market reaction, what is happening in the
traditional equity markets.
We all know that both institutional and retail
investors have been very active in the last
year or so in buying Bitcoin.
Now because of this massive plunge in the
equity markets they have no other option but
to liquidate some of their positions in in
other assets such as Bitcoin and of course,
gold is seeing massive pressure because of
that.
In order to save themselves from margin calls
in traditional assets.
That is the one particular reason that I can
think of that, why we've seen this massive
plunge in the bitcoin price.
Otherwise, right now, this is the moment that
we are going to check.
The fundamentals of bitcoins are going to
be put to test because monetary policy around
the globe which is utilized, which is by implemented
by central bank is going to be tested.
So if that policy is really going to remain
in place, now is the time.
In the coming quarters we're going to really
see enormous amount of stress test with respect
to that monetary policy.
So we shouldn't be seeing this sort of a massive
sell off in the Bitcoin price.
In fact, I believe that we should see the
massive surge in a Bitcoin price, but that's
not happening.
The only reason and the actual factual reason
that I can share that with you is investors
are liquidating some of their positions and
putting that money in order to cover the margin
call.
But when it comes to bitcoin price, I'm happy
that it is dropping.
You know why?
If it touches that three thousand seven hundred
mark again, I'd be a buyer again on that.
Ok.
We know what the stock markets are selling
off.
The equity markets are selling off because
of the economic impact of the corona virus
spreading worldwide.
But people are saying to me, why is gold selling
off?
Why is bitcoin selling off?
Because up until recently, you know, if the
equity markets have been coming down, sometimes
we've seen the likes of Bitcoin doing quite
well.
But it is just like I think when I was last
doing a call with you guys, in January, when
everybody's selling everything, everyone is
losing on their equity portfolios, then end
up selling what they've been doing well on
to offset some of their losses.
So that's why I mean, gold is down massively
today and people are saying, why is gold down?
You know, surely that's a safe haven.
Well, no.
When the baby gets thrown out with the bathwater,
when the markets get to this sort stage.
And we saw this in the financial crisis back
in 2000 and 2008, 09, 10 for periods where
gold actually would have periods where it
pulled back because that intense moments when
everybody's selling then or their equity portfolios
are going down, then they need to cash out
of some of their profitable positions.
And that's what we're seeing with gold and
like you said, Bitcoin's down today as well.
And when do you think this bloodbath will
be finished?
I think there is a lot more to go.
Look, you know, if you had to speak in off
a one day percentage moves, right?
So look at the percentage move right now in
front of you.
This is the Stoxx 600.
We have not seen these sort of things.
But one day plunge in the market going back
all the way to nineteen eighties.
Footsie 100?
Massive one day plunge since 1987.
Look at KAC 40.
Similar message.
But when you look at the Footsie, Footsie
MIB, the Italian index.
I'm not seeing that sort of a selloff in Footsie
index, which is insane.
You know why?
Because it is Italy which is under enormous
amount of pressure.
It is Italy which is under a lockdown condition
now.
And it is Italy where we going to see the
massive banking crisis.
We heard from Christine Legarde that she didn't
reduce our interest rate, but Germany came
out and then they said, OK, you know what?
We are going to take extraordinary measures,
meaning they're not going to run the balanced
budget anymore.
Again, going back to the other earlier conversation
of testing the monetary policies by central
banks, right?
So, Germany is going to introduce massive
budget spending in order to soften the blow
of Coronavirus.
Now, to answer your question, precisely when
are we going to see this bloodbath to finish?
I don't think we are near that space now.
Yes, the massive plunges that I have just
explained to you over the charts, like Stoxx
600, Footsie 100, KAC 40.
We could see some sort of a retracement because
these plunges are, you know, unprecedented.
Like I said, the last time we've seen any
sort of a massive sell off at this magnitude,
you have to go back or in the history all
the way to nineteen eighties to 1970 in order
to witness that.
But overall, for investors perspective, I
think I'm gonna hold my bullets because I'm
still waiting for these markets to fall a
lot more than what they are because we are
still sitting at 25 percent correction from
all time high.
And I'm not a buyer until or unless I start
seeing that 40 percent mark.
Well, the global central banks, the central
banks and the governments around the world,
they've still got some armor, so to speak,
some ammunition up their sleeve.
So there's still gonna be measures that will
come in.
And we saw the Federal Reserve last week make
that unprecedented move of cutting rates ahead
of next week's Federal Reserve meeting, the
FOMC meeting.
So they're gonna cut rates again next week.
But there could be other measures.
And in this environment, what I've been just
been saying to my traders here today is that
you've got to stay connected to what's going
on in the news, because at any moment the
US could come out with something else.
At any time.
And then suddenly you thinking, well, hold
on a second, the markets are all bouncing
or rallying.
What's going on?
It's because maybe some is gone.
The US government or the Treasury or the Federal
Reserve come out with something.
So but generally, this isn't over, is it?
We're not in a containment stage at the moment.
And the economic fallout is still there.
Now, the markets are forward pricing.
So they're trying to already forward price
in what is the economic fallout going to be.
And that's what we're seeing and we're seeing
uncertainty in the markets, which is what's
creating this huge volatility.
We can talk about what opportunities there
are, but I don't think that the equity markets
are done yet.
Now, don't get me wrong, They could bounce
at any stage and put in some good oversold
technical bounces.
But I very much doubt that the stock markets
have made a low to share.
I suspect if as the stock markets come down,
bitcoin will fall further.
Now, so when I was last with you, we were
talking about Bitcoin have been having a nice
run.
So I'm just looking away at this chart at
the moment.
Bitcoin had been having a nice run in into
January and into February and I was talking
about Bitcoin doing a pullback, but I wasn't
expecting it to pull back this much, I must
admit.
But these are unprecedented times.
These are, you know, beyond your standard
deviation events.
So most of the time we train within standard
deviations.
We know what roughly the markets do, the sort
of volatility to expect.
And we've now gone to this high volatility
environment again, which we haven't seen the
equity markets since the financial crisis.
We're going to get a lot of the weaker hands.
We'll get cleared out of this.
I still actually see the long term prospects
for bitcoin, but this is great because this
is going to see a lot of people throw in the
towel and say they'll say, I'm sick of trading
bitcoin now I'm off.
And that's the way the markets work.
It's the same of the way that the equity markets
work.
And it always has been that way.
Markets have good runs.
Then they either have periods of consolidation
where it bores investors out of positions
or they have bear markets and that gets people
out of positions as well.
So I see this is a good thing.
It's a flush.
Could it come back down, revisit 3000?
Yes, it could.
But I still see in a year, 18 months time,
that's where I see it gradually trickle its
way back up.
Ok.
So talking about what you're doing in this
exact moment, how are you reacting to this
situation?
Like how are you managing your portfolio?
Are you just waiting for things to go even
worst or what are you doing exactly?
We're selling into rallies.
That's that's all we're going to do.
Any dead cat bounce is an opportunity for
you to sell the rally.
Why?
Economic data is gonna get even worse.
And nothing is baked into the earnings like
we discussed before.
So this is an opportunity for you to sell
into the rallies.
But be mindful.
The moment that we come close to any of those
important 200 day moving average.
Especially, let me give you a tip.
E-mini futures or S&P 500 index already touched
200 day moving average.
And every time we have touched the 200 day
moving average over the last 20 years, I'm
talking about two arrow here.
The prices have bounced back sharply up.
So I think I'm expecting that bounce today,
but I'm still not sure whether, you know,
if this is the end of the selloff.
I think we're going to still see massive,
massive drop from here.
And in terms of a buying that opportunity.
I think I'm waiting for the S&P 500 index
to drop below the 200 day moving average by
20 percent.
And then I'm going to come into the market
with full force, with full ammunition and
then start buying everything.
Interestingly, I had shorted gold with some
of our traders just a week or so ago, a week
or so ago.
When it was we put a gold short in and we
have our reasons for shorting gold.
When you would think that Goldman be flying
higher.
So, yes, I do have a number of different positions
in the market, but interestingly, I'm not
in the S&P or the Dow right now.
I shorted the S&P fun enough right near the
highs with some of our traders.
But I came out long ago.
And this is the reality.
People think the professional traders, they
get in, you know, like the S&P, I shorted
it the highs and I'd still be in it right
now the lows.
And that's just not the reality.
I took what is now a tiny chunk of the market,
but what seemed like a decent trade at the
time.
And now, you know, you think, ah, missed out
a bit there, but we can't capture it all.
So don't worry if you're missing out because
there'll be another opportunity round the
corner.
These markets are moving fast.
The best thing that people can do is manage
their risk and just wait for the next opportunity.
And don't worry, if you've missed out on some.
Cause there's gonna be plenty more opportunities
coming.
Yeah.
So as far as my trading is concerned, yes.
A lot of trading in likes of euro dollar as
well.
Don't mind trading that because it's the world's
most liquid currency.
So that's where as our fellow bitcoin.
I do think that in the long term it's gonna
be fine.
But who knows in the short term because like
I said, the baby gets thrown out with the
bathwater and it could still come lower.
If the equity markets do still go lower.
If you had to give a piece of advice to an
average trader who is trying to figure out
what to do, how to best profit from this situation
of immense crisis, what would that be?
Well, first of all, I don't give out advice
so I can share suggestions.
So that is if you are an investor, hold your
horses for the time being.
The markets let this dust settle a little
bit and then walk into it.
Because remember, we have two strategies.
This is your support zone, is being built
up a line.
This being your dollar line.
Right.
My kid falls like a knife in this in this
zone.
Right.
You can buy it right here.
Then you have very, very skilled traders who
are going to find that bottom.
Then you have investors who are slightly risk
averse.
They want to see, they want to buy it when
the market comes out of their support zone.
So for retail investors will not scale, wait
for that moment, wait for the price to come
out of that support zone.
We still don't know where the bottom is in
the market.
What we know that we are willing to buy up
to 30 percent or up to 40 percent.
And then that's what the discount is on.
Come on.
You've got to buy it at that particular point,
because this is the closest thing that we
have seen near the Bitcoin hype.
When that ICO hype happened.
Look at the activity at brokers level.
The volumes are going through the roof because
everyone is trying to take, you know, some
piece of the pie right now.
On the other hand, if you are a day trader,
this is the best time for you to get involved.
Because that one thousand percentage point
has become a norm.
Even today we've seen second break in the
S&P 500 index.
During this particular week there has been
two different occasions when the S&P 500 has
broken its seconds.
Right, meaning more than 7 percent move on
the market.
So to summarize, passive investor, wait.
Day traders, get involved in it.
Enormous amount of volatility.
Okay.
All right.
There's different parts of what my personal
strategy is.
One is we have to manage risk.
I'm seeing lots of people blowing their accounts
out there.
I am speaking to my regulators for my fund
and they were talking about how many people
are blowing up because they're not using things
like stop losses.
I constantly go on about this.
We've talked about traders.
But if you're gonna trade about stock losses
in this environment and if you can, a nightingale
in two positions adding to losing positions,
you're gonna get blown out of the water.
So please respect your risk management risk
a maximum of 1 percent per trade.
That would be the first piece of advice that
I could give as far as a strategy is concerned.
Reduce your position size and have wider stops
than you'd normally have.
The market like a wall said the volatilities
expanded by great to a great extent.
So we've got to have wider stocks in order
to account for that volatility.
The other thing from a risk perspective is
be really careful.
You want to treat stock indices.
Be really careful.
The S&P keeps on getting sharp.
The S&P in the Dow because they're hitting
the circuit breakers.
So you might well think you're going to capture
a bounce and then all of a sudden the circuit
breaker kicks in.
You get stuck in a position and then the market
reopens another several hundred points lower
than the way you were.
So sometimes you just have to accept that
certain markets are untrainable.
If you want to manage your risk.
So it all comes under the banner of risk that
that was name Islam and Charlie Barton.
Thank you, guys.
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