Bitcoin’s Plummet Gives an Opportunity to Buy the Dip
Bitcoin’s value fell by as much as 15% last weekend over a mix of regulatory concerns, power outages in China and worries over inflated prices, Bloomberg reports.
While some remain skittish, Bitcoin bulls welcome a long-sought-after trading opportunity: buy the dip.
Global head of research at New York Digital Investment Group Greg Cipolaro wrote in an email to subscribers, “Our desk has been a net purchaser over the past 24-48 hours,” CoinDesk reported.
Cipolaro continued that investors having a buy-the-dip mentality during these events is indicative of an increasing tolerance to Bitcoin’s volatility.
He added, “We believe the root cause of the sell-off had to do with investor positioning rather than fundamental news. Simply put, traders were overleveraged and positioned long, resulting in forced liquidations,” indicating that investor sentiment in certain markets, and not Bitcoin’s overall value, has changed.
The activity is reminiscent of similar dips last month. Coindesk reported in late March that Bitcoin buyers “may have bought the recent price dip and now are taking down their cryptocurrency from exchanges … To digital-market analysts, it’s a bullish signal traders or investors might be preparing to hold their BTC for the long term.”
In late March, Bitcoin experienced similar volatility when prices slumped to $50,000 from a then-all-time high of $56,000.
For long Bitcoin investors, or for investors who now want to get in on the game, the drop in price signals a good buying opportunity. The buzz around “buy the dip” could also benefit long investors who have underlying fears about Bitcoin’s volatility but stand to profit from rallying other investors to buy in and maintain price levels.
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