Bitcoin BTC/USD has failed to break above its record highs hit earlier in March, with sharp corrections and sideways action becoming the order of the day.
As of this writing, Bitcoin was exchanging hands at $67,530.53, nearly 8% off from its peak of $73,000, according to data from Benzinga Pro. That said, over a larger timeframe, King Crypto has been a gainer, surging 60% year-to-date.
Dips and consolidation in a bull market may be difficult tests for traders, with impatient investors being spooked out, while the long haulers capitalize on the reduced prices.
Benzinga talked to experts to understand the dynamics behind these market phases.
Market Dips: Opportunity Or Caution?
Popular cryptocurrency trader and analyst Michaël van de Poppe stated that corrections and retracements have provided "tremendous" buying opportunities for investors in the current market.
"They do happen, due to profit-taking or narratives that change within the market sentiment," he remarked.
Specifically talking about his trading strategies, van de Poppe revealed that he utilizes the downsides for buying gradually, thereby increasing his allocation towards the markets the lower they go.
Graeme Moore, Head of Tokenization at Polymesh blockchain, and author of the book "B is for Bitcoin" highlighted that it's not unusual for Bitcoin to pull back 20-30%, or altcoins to 50% or more in typical bull market cycles. "Until the bull cycle ends, all dips are for buying," he stated.
That said, Moore expressed a word of caution, saying, "Only risk what you can afford."
On similar lines, Adrian Fritz, Head of Research at 21.co, the parent company of cryptocurrency asset manager 21Shares, emphasized that minor dips in a bull market help to avoid overheating and lay the foundation for future growth.
Is Range-bound Movement Desirable?
Van de Poppe refused to see extended consolidation phases as negative signals.
"The markets are building up for a substantial breakout and the longer this consolidation takes, the heavier the breakout will be," he opined. The popular trader asserted that buying during heavy volatility can be more difficult than when the market is quieter.
Ryan Lee, Chief Analyst of Bitget Research, highlighted the importance of spot and derivatives data during consolidation periods.
For spot, Lee urged investors to track the progress of spot ETFs, the major drivers of capital flows into Bitcoin this year. He also flags derivatives indicators like Open Interest, Funding Rates, And Long/Short Ratio as key to understanding investors' positioning and decision making.
For Fritz, the extended consolidation phase meant that the market "might be agreeing on a certain value for Bitcoin." This can help drive the confidence among investors about its long-term potential.
The broader consensus that emerged from the aforementioned insights aligns with an old but popular adage: “The longer the base, the higher the space.”
Photo Courtesy: Shutterstock.com
These insights set the stage for deeper discussions at the upcoming Benzinga Future of Digital Assets event on Nov. 19.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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