The past week has seen extreme volatility for the cryptocurrency market with Bitcoin price slumping from $63,800 to $53,400, marking a 17% drop.
The substantial fall in BTC price has resulted in over $600 million of liquidation in the crypto market in the past couple of days. Other altcoins and memecoins have also suffered substantial dips following the downer of BTC.
As market analysts predict extreme price swings for BTC in the coming days, traders are flummoxed with the prospect of buying the dip or liquidating their assets when there’s still time.
In this article, we will analyze the performance of BTC in recent weeks, factors contributing to the dip, future price swings and whether this is the right time to invest your money in crypto gold.
What caused the BTC Dip?
Bitcoin had an initial impressive run in the first half of 2024 with events like Bitcoin Halving and approval of spot Exchange Traded Funds (ETFs) contributing to the rise. However recent events unfolding in the first week of July have acted as an abrupt speed breaker to the forward march of BTC.
Two of the most significant market factors contributing to the massive price downtrend of BTC are the potential sell-off from Mt. Gox repayments and the transfers of German government controlled BTC holding. Both entities- the defunct exchange Mt. Gox and the German government- have a combined holding of over $4.4 billion of BTC. Any movement related to this massive stock of funds has obvious repercussions on the crypto market leaving traders and investors jittery.
BTC Analysis
While investors were expecting a strong bounce from $60,000 levels – which was considered a major support – the BTC price had plunged further below due to massive sell-off. With this pace, BTC price also broke the 4 months range and retraced to February levels.
According to market data from Coinmarketcap, BTC is currently trading near $54,400 and it is down over 20% since the past month. The price downtrend has been cool down as the market approached the weekend where we usually see mild movements.
Should you buy the Bitcoin Dip?
While the price of Bitcoin has drastically fallen, it has also brought a golden opportunity for investors. Several market experts have shown confidence in BTC stating that the current price levels are favorable to bid. If BTC price reclaims $60,000 during the weekend, the bullish sentiment could come back to the market with expectations that it will march towards a range high $72,000 in coming days.
However, the breach of $60,000 support level has undoubtedly caused concern among crypto investors and it is triggering more selling pressure. Over the next few days, the cryptocurency market may experience a mix of panic-selling and overreaction, contributing to the further decline. Although the reclaiming of $56,500 has brought a leap of faith and the market has found some stability at the level.
There are also concerns about Bitcoin surging to its past week’s highs with plenty of traders strongly believing that if it goes down further. Such in case, it might revisit the low of $44,000 before another major pullback. Though the overall sentiment around Bitcoin price next week remains cautious.
Assessment Before Buying
If you choose to buy BTC or other crypto assets right now, keep in mind that currently there is a lot of uncertainty about the next potential price movement. Below are the points to consider before diving in to buy the dip:
Risk Tolerance
Buying Bitcoin during a downturn like this can be profitable if the market rebounds, however it also carries significant risk of lowering further. It’s crucial to assess your risk tolerance and only invest what you can afford to lose.
Market Conditions
The current market condition is uncertain and much volatile. Despite it being cooled down on the weekend, the weekly open could get even more volatile. Consider waiting for stabilized market movement or a clear reversal before jumping in. It’s suggested to look for consolidation or a confirmed uptrend before making any substantial investments.
Long-Term Perspective
If you believe in Bitcoin’s long-term potential, the current market presents a precious opportunity for building your portfolio. In addition, tools like dollar-cost averaging (DCA) can even mitigate the risk of further declines by spreading purchases over time. The long-term investors in Bitcoin have tended to become more successful than those seeking short term profits.
Conclusion
Deciding to buy Bitcoin in market conditions like this depends on individual risk tolerance and the investment strategy. Although the current market is offering a magnificent chance for long-term investors, it also poses risks. Now it’s up to the investor to decide whether they are prepared to take the risk and be ready for next week’s outcomes in the Bitcoin price.
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