The past week has been tough for bitcoin and cryptocurrency in general. The market was affected after the hit. So much so that it began to seem that there was no end in sight. Coins dropped at high rates. Recreates a common adage in financial markets; “There is blood in the streets.”
Investors were reacting negatively to this. The Arcane Research Fear & Greed indicator has returned to extreme fear. down to an all-time low this year.
Fear & Greed Index down to 10 into extreme fear | Source: Fear & Greed Index on Arcane Research
The index is currently at 10 in great fear. This means that investors are afraid of putting their money in the market. With no more money going to the market, prices will go down. And we’ll see redder streaks.
Time to buy blood?
“Buy the dip” is a popular saying in the cryptocurrency space. People are encouraged to buy coins when there is a significant drop in prices. Quoting this as the best time to enter the market. But what happens when the dip passes just by diving into full bleeding?
With red charts and arrows pointing downwards, it looks like the market is bleeding. With massive liquidations and distrust of digital assets continuing, the valuation of the digital currency market has fallen.
Related reading | Will Big Rise in Bullish Sentiment Drive Bitcoin Price Higher?
It is always better to buy assets when there is ‘blood in the streets’. People are wary of the market. Weak hands fall back, which leads to a lower price. And that’s when the long-term workers come out to play.
There is never any definitive way of knowing exactly where the market will arrive. But the good sign is when the assets go down so much that people are afraid to buy back. The time when it seems that the coins will never recover and this is the best time to buy.
Is there a market recovery looming?
Usually the trend in the market is huge declines followed by a good recovery. People buy assets that have fallen by a significant amount in the hope that they will make a profit when they recover.
Total market capitalization less than 50% ATH | Source: Total Market Cap on TradingView.com
As institutional investors continue to hold their bitcoins, they seem to have hope in the market.
MicroStrategy recently bought an additional $500 million worth of bitcoins to add to its growing portfolio. Goldman Sachs has boosted its bitcoin trading activities by partnering with Galaxy Capital. All goodwill movements in the market.
But with the hash rate at record lows and the number of bitcoins mined in one day declining, it is likely that the market is heading towards Bear Market.
In this case, investors may be heading for a long wait. like encryption Bear Markets are notorious for being painfully long. Lasts years at a time.
But there is as much chance of recovery as there is overall Bear Market.
This wouldn’t be the first time the market has advanced after massive recessions. Many investors see lower prices as an opportunity to buy back. More money comes back to the market, and so does more faith. Increased asset valuation.
Bitcoin price dropped below $30,000. Less than half of its all-time high. A crucial holding point for the origin.
Ethereum drops below $2k.
The total market valuation is now $1.21 trillion. Less than 50% of its highest market capitalization of $2.4 trillion.
Featured image from Cointelegraph, Fear & Greed Index from Arcane Research, crypto chart from TradingView.com