The price of Bitcoin rose rapidly in December 2017, and commentators are debating whether it has reached the best time to sell. Those who believe there’s more downside left anticipate further losses for cryptocurrency markets, while those who think this is a bottom point imply strong investment opportunities ahead.
The “buy the dip crypto reddit” is a debate that has been going on for quite some time. The question of whether Bitcoin price has bottomed out is still up in the air, with many analysts saying it’s too early to tell.
The cryptocurrency market has had a difficult week, owing to the Terra ecosystem’s collapse and its impact on Bitcoin (BTC), Ethereum (ETH), and altcoin prices, as well as panic selling when stablecoins lost their peg to the US dollar.
The crypto market has been facing adverse headwinds since late 2021, when the US currency gained strength and the US Federal Reserve signaled that interest rates will be raised during the year.
The 14-month RSI for the DXY has now “reached over 70 for the first time since its late 2014 to 2016 run up,” according to a recent study from Delphi Digital.
Performance of DXY index. Delphi Digital (source)
This is significant since 11 of the 14 prior occurrences of this “linked to a higher dollar 78 percent of the time over the next 12 months,” implying that asset misery might worsen.
The DXY gained around 5.7 percent on average when its RSI moved over 70, which “would put the DXY Index just short of 111, its highest level since 2002,” according to the May 13 data.
BTC/USD versus. DXY Index (inverted) with 60-day rolling correlation Delphi Digital (source)
According to Delphi Digital,
“This would not be good news for the crypto industry if the link between the DXY and BTC continues reasonably high.”
Bitcoin is nearing a critical price bottom.
Taking a broader view, BTC is now retesting its 200-week exponential moving average (EMA) around $26,990, which Delphi Digital claims has “historically functioned as a crucial level for price bottoms.”
BTC/USD vs. 14-week RSI vs. 200-week EMA Delphi Digital (source)
Bitcoin is also holding above its long-term weekly support range of $28,000 to $30,000, which has shown to be a reliable source of support throughout the current market volatility.
While many traders have been panic selling in recent days, Pantera Capital CEO Dan Morehead has taken the opposite stance, saying, “It’s ideal to purchase when price is way below trend.” This is one of such instances.”
Inflows of bitcoin funds in relation to the price movement. Twitter (source)
According to Morehead,
Since December 2010, Bitcoin has only been this “cheap” or cheaper compared to trend 5% of the time. Go the opposite route if you have the emotional and financial resources.”
Delphi Digital, on the other hand, issued a warning, stating that “the finest prospects or “deals” in the market “do not last long.”
Because BTC has been trading in the $28,000 to $30,000 region for so long, “the longer we see price develop in these levels, the more plausible additional continuation becomes.”
The “weekly structure and volume structure support at $22,000 to $24,000” and the “2017 all-time high retests of $19,000 to $24,000” are the next significant locations of support if the price drops further.
According to Delphi Digital,
“We’re beginning to see early symptoms of surrender, but we can’t say we’re reaching the point of maximum suffering just yet.”
The author’s thoughts and opinions are completely his or her own and do not necessarily represent those of Cointelegraph.com. Every investing and trading choice has risk, so do your homework before making a decision.
Analysts debate whether Bitcoin price has bottomed. Some say that the dip is a sign of the market beginning to recover, while others believe it’s too early for optimism. Reference: is the crypto bull market over.
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