Buy the dip image: Jernej Furman / Flickr / CC
It’s not exactly news that Bitcoin’s wild swings might present buying and selling opportunities. The No. 1 cryptocurrency token is trading at $40,084.27 as of this writing, down almost 40 percent after reaching an all-time high of $64,829 in mid-April. The price of a token dipped down to $31,926.37 earlier today, May 19.
The relative strength index (RSI) – a technical indicator widely used to gauge momentum and identify overbought and oversold conditions — indicates that Bitcoin’s bull market correction may be coming to an end. A correction is a price decline of 10 percent or more and can last days or months.
The 14-week RSI has dropped to 53.00, a level that has consistently acted as solid support and marked an end of corrective pullbacks during the 2016-2017 bull run, Coindesk reported.
“From a technical point of view, the price is finding some support from the 200-day exponential moving average, plus other momentum indicators such as the RSI, which shows that the price is somewhat oversold,” said Simon Peters, cryptoasset analyst at multi-asset investment platform eToro.
“This means there is a possibility of buyers now stepping in to push prices up and, as we have seen before, investors waiting on the sidelines are already using the sell-off we have seen to invest in cryptoassets, taking advantage of the volatility,” Peters added.
There were already signs of exhaustion in the market when Tesla CEO Elon Musk tweeted on May 12 that he will no longer accept Bitcoin as payment for his electric vehicles. Musk tweeted that he would not be selling any bitcoin, but his tweets “look to have scared some retail investors into selling,” Omkar Godbole wrote for Coindesk. “Whales had started moving money out of bitcoin, leaving less-wealthy investors struggling to do the heavy lifting above $60,000.”
The latest bitcoin market correction may have been driven by panic selling from “newbie” investors who bought during the bull market. “The bitcoin market is in a historically significant correction,” blockchain data analytics firm Glassnode wrote Monday in a post. “There are strong signals that short-term holders are leading with panic selling.”
Bitcoin is still up 365 percent year on year and there’s evidence that long-term investors are buying the dip. “Coupled with the weekly RSI hovering at historically strong support, that suggests the cryptocurrency may soon resume its uptrend,” Coindesk reported.
However, Bitcoin’s market capitalization dropped almost 25 percent over the last day, according to CoinMarketCap. Prices reached a three-and-a-half month low on Wednesday.
Tampa Bay Buccaneer quarterback Tom Brady is one in a growing chorus fighting back at the Bitcoin plunge. “Over here we just buy the dip!” Brady tweeted. Brady changed his Twitter picture earlier this month to one of him shooting lasers out of his eyes, Boston Local reported.
“The laser eyes meme that initially swept across crypto social media in February 2021 saw crypto influencers, industry leaders and regular users change their Twitter profile pictures to include laser eyes. The fad was to signify support for Bitcoin’s price surging until it hit $100,000,” according to Martin Young of Cointelegraph.
Buy the dip image: Jernej Furman / Flickr / CC
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
