Why crypto market sentiment can provide a unique buying opportunity
Sentiment in the crypto market has not shown any significant improvement over the past couple of months. There have been points where it looked like the worst was over, but the market had fallen back into the extreme fear zone. But instead of the doom that usually follows markets like this, it could be a unique opportunity for investors looking to buy at bargain prices.
A good time to buy
Historically, there have been times when buying cryptocurrencies has been more favorable than others. One of these has been times when the market has spent a long stretch in extreme fear territory and there is low momentum in the market.
Investors are often wary of putting money into digital assets at times like this, causing the price of the assets to drop. However, this could present a buying opportunity due to the low prices and reduced volume needed to move the market.
Total market cap drops to $851 billion | Source: Crypto Total Market Cap on TradingView.com
An example of this happening is back in mid-2020 before the bull run had begun. The crypto market had spent most of March and April in the extreme fear region. What would follow was a market rally that would eventually see bitcoin break above $10,000, a more than 100% increase from its March 2021 low below $4,000.
The crypto market may see an improvement
Currently, the crypto market is succumbing to the pressure of the CPI data release and the FOMC meeting. These are historical events that have always had an impact on the macro markets, and bitcoin’s high correlation with the stock market has led to a decline during this time as well. However, the tide may be turning.
The Fed has been raising interest rates for some time now due to high inflation. Naturally, this cannot last long and there will eventually be a reversal. When this happens, risk assets will react positively and cryptocurrencies such as bitcoin are expected to do well in such a market.
“Rich Dad Poor Dad” author Robert Kiyosaki predicted that this change would come in early 2023 and that the dollar would fall in value. An event like this would trigger a flight to safety in digital assets like bitcoin, which Kiyosaki has urged investors to buy.
Featured image from Finance Monthly, chart from TradingView.com
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