Bitcoin is once again leading the market in the most recent descent into the red. This has seen the pioneer digital asset fall to 18-month lows and it has taken the rest of the market down with it. In such climes, it is usually advised that investors remain calm but that is easier said than done. Bitcoin which looked poised to visit the mid-2020 levels has not formed any kind of support and as such the market continues to wonder if the worse is yet to come.
More Bitcoin Dumps Incoming?
With the current bitcoin prices, it is now well below its 50 and 100-day moving averages. This has cemented the bearish trend for the digital asset, regardless of any positive performance over the next few days. In fact, there is every possibility that the price of the digital asset will most likely dump to 2017 all-time high levels before there is a recovery in this regard.
Related Reading | Bitcoin Decline Sees Funding Rates Plunge To Three-Month Lows
It is also important to note that it was said that the cryptocurrency had been at oversold levels, hinting at fatigue on the part of sellers. However, recent trends have shown that this was not the case. Rather, it had been a setup for even worse sell-offs.
Due to this, it is most logical to view the market from the point of view of a prolonged bear market. Yes, there may be some merit to buying the red right now but if previous bear markets have taught investors anything, it is the fact that it can always get worse.
BitStarz Player Lands $2,459,124 Record Win! Could you be next big winner?
BTC price dumps to $23,000 level | Source: BTCUSD on TradingView.com
Also taking into account that previous bear markets have seen the price of the leading digital assets dump about 90% in the past. Even with the recent decline, Bitcoin and Ethereum still remain above these levels. This means that if they were to dump completely to follow previous trends, then there might be more pain ahead for investors.
Investor Sentiment In the Gutter
With the decline in the price of bitcoin had come great fear. This has seen the Fear & Greed Index dip toward historical levels. The reading on the index currently stands at 11, one of the lowest it has been in recent times. This indicates that investors do not want to put money in the market. Instead, they are looking to sell off, even at a loss, to mitigate further losses.
One thing to note, however, is what times like these have bred in the past. When most retail investors are scared to go into the market, larger investors tend to take advantage of this fear and play it for their own gain. Buying up large quantities of BTC, causing the price to spike once more.
Related Reading | Bitcoin Open Interest Falls As Price Dips Below $31,000
This puts the whales in automatic profit. But there is also a risk to following these trends because the spike in price brought about by such large buys can be easily lost. In such cases, prices have been known to decline even more compared to their previous points.
In markets like this, caution needs to be applied to every move made. This is the bedrock of any investing strategy. Bitcoin’s volatility is legendary and true to form, the volatility can swing either way, causing profits or losses.
Featured image from Forbes, chart from TradingView.com
Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…
The Bitcoin price rebounded off the low of its current range and retraced its weekend loss…