The last few days have been quite turbulent for the digital asset industry. Bitcoin, the largest cryptocurrency by market capitalisation, rose from $18,715 on September 7 to $22,645 last evening.
However, since then, BTC has retraced its steps, stumbling back to the $20,300 range at the time of writing. Most other cryptocurrencies in the top 10 list and beyond have followed suit, flashing red over the last 24 hours.
The drop comes after the US Bureau of Labor Statistics reported that inflation was higher than expected in August 2022. Economists in the country were expecting inflation to fall by 0.1 percent. This is in continuance with the downward trend observed in July when inflation fell to 8.5 percent from its multi-decade high of 9.1 percent in June.
However, according to the Bureau’s report, consumer price index (CPI) actually increased by 0.1 percent (month-on-month), with headline inflation coming in at 8.3 percent as opposed to the 8.1 percent that was expected.
In response to the soaring inflation, the crypto industry tumbled along with global financial markets. Bitcoin nosedived more than 11 percent in less than 12 hours. The second largest cryptocurrency by market cap, Ethereum, also slipped 10 percent, falling from $1,743 to $1,543 in roughly the same period.
The global market cap of the crypto industry also plummeted around 9 percent, falling from $1.07 trillion last night to around $977 billion this morning, according to data from CoinMarketCap.
Is it a good time to buy the dip?
While falling prices are bound to cause pain and disappointment for the cryptoverse, they also allow you to enter the market at lower prices. This is a practice known as buying the dip, a strategy that most experts swear by.
Falling prices also create an opportunity for existing investors to purchase more coins at lower prices, thereby decreasing their cost of acquisition. The premise here is simple: buy low and sell high.
Moreover, there is some evidence that the current bear market could end soon, and prices could shoot up again. If this happens, those who buy the dip will see massive profits when the bulls take over.
“It’s been 310 days since the #BTC Bull Market peak at $65,000. This means that this Bear Market is getting close to ending. Historically, $BTC Bear Markets tend to find their absolute bottom price approximately 365 days after the previous Bull Market peak,” tweeted Rekt Capital, a renowned crypto trader and analyst.
However, what is also evident from his tweet is that BTC prices could dip further before they begin to rally. This is a notion that several other experts also support. “Current pivot is 21k. A clean break below here, and 19k is next. Break 19k, and it goes to the main target of 14k-16k for the last low,” tweeted Crypto Capo, another prominent crypto analyst.
However, this hasn’t stopped seasoned investors from buying BTC at current prices. “Despite the recent turbulence, I believe that the trajectory of bitcoin and other major cryptos is upwards,” said Nigel Green, CEO of the Devere Group, a financial advisory and asset management firm. “Like many serious crypto investors, I’m buying the dip. I’m embracing this short-term volatility for longer-term gains,” he added.
When it comes to Ethereum, prices could see a significant rally in the coming days. This is because the Ethereum merge is just around the corner and is expected to go live between September 13 and 15. The Merge is touted as one of the most significant events in the cryptosphere, and it should cause ETH to rally if everything goes smoothly.
Several analysts and traders support this notion, including crypto news outlet, Coinpedia, which predicts ETH will touch $7,500 by the end of the year.
Therefore, buying ETH at current prices could bring massive gains if these predictions come true. It could be one of the reasons why Ethereum whales have been buying more and more ETH since the start of the year. “They are anticipating some positive price action around the Merge,” according to a report by Nansen. In short, these whales are buying the ETH dip in the hope of a rally after The Merge.
Conclusion
Falling prices may cause short-term pain. However, crypto markets are cyclical in nature. This means that a rally usually follows a crash, and a bear run usually gives way to a bull market. Therefore, buying tokens when prices are low and holding on to them until the market rallies is a promising strategy.
At the same time, it is essential to note that crypto markets are highly volatile and speculative; no one knows when the bull market will arrive, how long it will last and to what extent prices will rise. This is why it is crucial to do your own research and invest only as much as you are comfortable losing entirely.
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