Bitcoin, Ethereum, XRP, Solana price dropping, should you buy the dip?
After a steep price decline last week, Bitcoin, Ethereum, BNB, XRP, Solana, Avalanche, and most other cryptocurrencies are showing additional bearish momentum this Sunday. In the current state of the market, is it a good idea to buy the dip, or should traders wait longer before deciding to take advantage?
Bitcoin, Ethereum, BNB, XRP, Solana, Avalanche Price Down
After the Fed announced an interest rate hike last week, the stock market had its worst day this year. Major stocks like Tesla, Nvidia and Apple fell more than 5% in a single day on May 5.
Since Bitcoin follows the movements of the stock market, it also fell over 9% in a single day to a low of $36,250.
Since other cryptocurrencies follow Bitcoin’s price movements closely, this created a domino effect where most altcoins like Ethereum, BNB, XRP, Solana, and Avalanche also saw significant price declines from 2018 to 2018. order of 5 to 10%.
According to CoinMarketCap, on May 5, the global cryptocurrency market capitalization fell significantly from a high of $1.8 trillion to a low of $1.6 trillion, wiping out $200 billion. dollars in a single day. A drop in market capitalization of more than 12% in a single day.
With the recent turn of events for the equity and cryptocurrency markets, the common question is, “should I buy the dip?”
What to buy dip?
As the name suggests, buying the dip is precisely that, buying a stock or asset after a sharp drop in the market, hoping to profit from an upcoming rebound.
It should be noted that buying the dip works much better in a bull market, where dips often occur before continuing the bullish momentum. Additionally, buying the dip is a promising strategy when a trend reversal is looming on the horizon, with the current dip heralding a potential bottom in the market.
Unfortunately, cryptocurrency and stock markets are currently in a bear cycle. Although a rebound may occur, the general trend is bearish, especially for Bitcoin and cryptoassets.
Should you buy the dip?
A sudden trend reversal next week is unlikely with current market conditions. Bitcoin and other major cryptocurrencies still need time to find a level of support, potentially decouple from the price action of the stock market, and gain additional momentum in trading volume to begin their bull run.
Buying dips works much better for assets in a bull market, and in this case, since we are in a bear cycle, a better alternative is to average the dollar cost.
Suppose you are looking to open a position in bitcoin and cryptocurrencies. In this case, the best option is to set aside a certain amount per month and slowly accumulate all major cryptocurrencies such as Bitcoin, Ethereum, BNB, XRP, Solana, Avalanche, etc.
By using an average dollar cost investing strategy, you can take advantage of the bear market without getting too psychologically involved, making your investing less stressful and creating a stronger position. After all, crypto markets follow a similar cycle year after year, involving a long and terrible bearish period through a short and significant bullish cycle sending cryptocurrencies up 5X to 10X in the span of 1-2 months.
Averaging the dollar cost will reduce the overall cost of your investment. The slow accumulation period will ensure that you don’t fall victim to entering the market at the wrong time. As far as we know, cryptocurrencies may continue their bearish/sideways trading over the next few months.
If you decide to buy the plunge, investing all your capital at this time, you may risk entering at a relatively high price. It would not be surprising if Bitcoin dipped below $30,000 this month before attempting to establish support and reverse its trend.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency.
Read also :
Will Bitcoin, Ethereum, XRP and Solana Prices Rebound Soon?
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