Over the past four days, the situation on the cryptocurrency market has changed dramatically. After bitcoin updated its historical maximum value above $ 58.6 thousand, its price began to fall, at the moment dropping below $ 45 thousand. Today, February 25, the cryptocurrency is trading at $ 50.5 thousand, writes RBC Crypto.
Analysts explained why the asset price dropped sharply and gave forecasts for the near future.
“It’s a good time to buy bitcoins”
Mikhail Karkhalev, financial analyst at Currency.com
The reason for the decline in the crypto market could be one of several events, or perhaps the totality of what was happening in the markets.
The first is the sale of large volumes of cryptocurrency in order to fix profits, which is quite natural, especially in light of the message that 28 thousand BTC were entered on the Gemini exchange. Even if they did not participate in the sale, people were “pretty nervous” and hedged possible risks.
The second is Jen Psaki’s statement that the administration of President Joe Biden considers China to be a competitor to the United States on the world stage and intends to approach building relations with Beijing from a position of strength. This contradicts Biden’s pre-election statements, which brings new risks to the markets in the US vs China 2.0 confrontation.
Third, as the economy recovers at a faster than expected rate, markets are already targeting a 25 basis point rate hike by the Fed by the end of 2022. Analysts and investors today estimate the likelihood of such a development of events at 70%, against 50% last week.
Can we say that the situation on the digital money market has become critical? Look at the large funds and investors that continue to actively invest in bitcoin.
The same MicroStrategy, according to its representatives, buys bitcoin during any drawdown in large quantities, but gradually, so as not to have a serious impact on the rate. Nevertheless, the price is being supported and this is perhaps the main incentive for continued growth so far.
For there to be grounds for talking about the beginning of a cycle of decline, bitcoin first needs to break through $ 46 thousand down, but even lower, in the region of $ 40-42 thousand, there are also powerful zones of liquidity accumulation.
We have already seen how traders buy from $ 46 thousand, from $ 40-42 thousand it will be done more aggressively.
I do not see any prerequisites for a decrease yet. In my opinion, now is a good time to buy more bitcoins. If purchases continue at the same pace, then in the next week or two, bitcoin will try to overcome the last maximum again.
“We will see a series of jumps in the bitcoin rate”
Nikita Zuborev, Senior Analyst Bestchange.ru
The current correction was quite expected and is within a manageable range. There are no fundamental prerequisites for the continuation of the fall today, as well as for the continuation of the sharp rise. The nature of the depreciation is absolutely technical.
Most cryptocurrencies have entered the stage of consolidation after the recent rally, one should not expect serious growth soon. Most likely, in the coming days we will see a series of wave-like surges in the bitcoin rate in the range of $ 45-55 thousand, until the balance of supply and demand normalizes. Altcoins will habitually follow the market trend set by the first cryptocurrency in terms of capitalization.
If we consider a long-term investment strategy, then the current levels are quite comfortable for buying, but we would advise to wait for the next price rollback below $ 49-48 thousand for a more comfortable and reliable entry point. Market sentiment remains extremely positive despite the technical correction.
For short-term strategies, we advise you to refrain from buying traditional altcoins. Today the market is in uncertainty with a small planning horizon. It is worth paying attention to the market for intraday trading only when local lows are updated.
We also advise you to take a closer look at the fundamental news of the DeFi segment, about a possible reallocation of capital from the Ethereum blockchain to the Binance Smart Chain. We advise you to allocate about 10-15% of the portfolio, which are set aside for risky operations, for the purchase of the native Binance token. The possibility remains that the recent explosive growth of BNB to the all-time high of $ 340 is just the beginning, and the dynamics of the token’s value will outstrip the average market trend.
“It’s better to buy bitcoin regardless of the exchange rate”
Max Krupyshev, SEO Coinspad
Retail investors, more exposed to emotional trading decisions, have been influenced by the general market trend. Bitcoin began to decline, people began to sell coins in panic. This is nothing new. In general, everything was expected, neither bitcoin nor any other asset can only grow and generally not experience periods of correction.
Trying to buy bitcoin “at the bottom” is almost as unrealistic as selling it “at its peak”. It is impossible to guess where the bottom is, where the peak is, it is difficult even for professional traders to do. Therefore, with bitcoin, the best strategy is not to buy cryptocurrency at all costs once, but to buy coins every two weeks, for example. This will average the purchase price.
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