Crypto Markets dive after the Cpi announcement, but it could be a good time to buy the dip
Of CNBCTV18.com IST (published)
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While falling prices are sure to cause pain and disappointment to 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.
The last few days have been quite turbulent for the digital asset industry. Bitcoin, the largest cryptocurrency by market capitalization, rose from $18,715 on September 7 to $22,645 last night (September 13). But since then, BTC has regressed, stumbling back into the $20,300 range at the time of writing. Most other cryptocurrencies in the top 10 list and beyond have followed suit and flashed red in 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 expected inflation to fall by 0.1 percent. This is in continuation of the downward trend observed in July when inflation fell to 8.5 percent from the highest level in decades of 9.1 percent in June.
However, according to the Bureau’s report, the Consumer Price Index (CPI) actually increased by 0.1 percent (month-on-month), with headline inflation at 8.3 percent as opposed to the 8.1 percent that was expected.
In response to rising inflation, the crypto industry collapsed along with global financial markets. Bitcoin nosedived more than 11 percent in less than 12 hours. The second-largest cryptocurrency by market capitalization, Ethereum, also fell 10 percent, falling from $1,743 to $1,543 over roughly the same period.
The global market capitalization of the crypto industry also fell about 9 percent, falling from $1.07 trillion last night to about $977 billion this morning, according to data from CoinMarketCap.
Is it a good time to buy the dip?
While falling prices are sure to cause pain and disappointment to 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 buy more coins at lower prices, thereby reducing the cost of acquisition. The premise here is simple: buy low and sell high.
Also, there is some evidence that the current bear market may end soon and prices may 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 of $65,000. This means this Bear Market is coming to an end. Historically, $BTC Bear Markets tend to find their absolute bottom about 365 days after the previous Bull Market- top,” tweeted Rekt Capital, a well-known crypto trader and analyst.
However, what is also clear from his tweet is that BTC prices may fall further before starting to rise. 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 main target of 14k-16k for last low,” tweeted Crypto Capo, another prominent crypto analyst.
However, this has not stopped experienced investors from buying BTC at current prices. “Despite the recent turbulence, I believe the trajectory for bitcoin and other major cryptos is up,” said Nigel Green, CEO of Devere Group, a financial advisory and asset management firm. “Like many serious crypto investors, I buy the dip. I embrace this short-term volatility for long-term gains,” he added.
As for Ethereum, prices may see a significant uptick in the coming days. This is because the Ethereum Merger is just around the corner and is expected to go live between September 13th and 15th. The merger is said to be one of the most significant events in the cryptosphere and should cause ETH to rally if all goes well.
Several analysts and traders support this idea, including crypto news outlet Coinpedia, which predicts that ETH will touch $7,500 by the end of the year.
Therefore, buying ETH at current prices can bring huge gains if these predictions come true. That could be one of the reasons why Ethereum whales have been buying more and more ETH since the start of the year. “They expect positive price action around the merger,” according to a report from Nansen. In short, these whales are buying ETH dips in hopes of a rally after The Merge.
Conclusion
Falling prices can 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, it is a promising strategy to buy tokens when prices are low and hold them until the market rises.
At the same time, it is important to note that the crypto markets are highly volatile and speculative; no one knows when the bull market will come, 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 completely.
