The Bitcoin Pull-Back – Was This The Time To Enter?
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Sunday and Monday saw the sharp correction in the Bitcoin price that had long been expected. Was this the time for new investors to enter the market?
The Bitcoin price had been inexorably climbing since passing the 2017 all-time high. Every time there was a dip it just got bought up again in a no-nonsense fashion. Things were different – institutions were buying.
Huge entities like Greyscale and PayPal were leading the way. Greyscale, buying for its Bitcoin Trust, and PayPal on behalf of its 346 million users. Other major buyers such as Michael Saylor’s MicroStrategy were making waves in the space with their huge recent Bitcoin purchases. Galaxy Digital Holdings and Square were the other notable buyers.
The Signs Were There
After passing its all-time high of around $20,000 Bitcoin just didn’t stop. Hardly any sideways price action to enable accumulation. You were either on this rocket ship or you weren’t. In a period of only 4 weeks Bitcoin doubled its value to $40,000 and still continued to rise.
$40,000 is a round figure and markets respect them. Profit takers must have seen their opportunity and the sell pressure became immense. A weekly RSI (Relative Strength Indicator) showing in the mid 90s gave plenty of notice that Bitcoin was now severely over-stretched.
The price reached almost $42,000 before the drop began.
A sharp and rapid plummet in the price saw Bitcoin fall to nearly $30,000. Two days of intense selling and the number one cryptocurrency finally got its correction.
More than $150 billion were wiped off the entire Cryptocurrency market cap amid the frenzied selling – such a stark contrast to the buying pressure that had preceded it.
A Fantastic Buying Opportunity?
When such alarming corrections are happening, it is extremely difficult to stay calm and focussed. Those who did and bought the dip could certainly be smiling as the price rebounded. For those new investors waiting in the wings, perhaps a price of near $30,000 was a touch expensive – or perhaps it was the buy of the year?
You had to be quick, as Bitcoin was bought up incredibly fast at these levels. At time of writing Bitcoin has now rebounded to around $36,000 – not bad for a day’s work.
It remains to be seen if Bitcoin will continue to drift sideways and downwards to continue its correction and allow more investors to get in. However, it can’t be denied that we are in a bull market and the trend is still definitely upwards.
There will always be corrections, and some of these will be stark like the previous two days – a time for investors to accumulate more, or for new speculators to get on board. However, history tells us that once Bitcoin does get on its bull run the upward trajectory is strong and the dips are fewer.
Was this the pull-back to get in on? Only time will tell.