For those who are new to crypto, you may have been alarmed to see Bitcoin peak at $58k only to fall to $43K in a matter of a few weeks. However, the sentiment has remained bullish with many institutions believed to be picking up Bitcoin and other cryptos at what they perceive to be discount prices.
At the time of writing Bitcoin is now above $49K and showing strong signs of recovery while Ethereum is above $1500 again. It feels as if we could be on the verge of another huge move as indications from Coinbase suggest that many powerful institutions have manipulated the market in order to buy Bitcoin at prices that they feel will inevitably increase.
“The outflow went to multiple custody wallets, indicating U.S. institutional investors are still buying bitcoin on the dip,” Ki-Young Ju, CEO of CryptoQuant, told CoinDesk. “I think it’s a bullish signal.”
Buy When There Is Fear, Sell When There Is Greed
Even though Warren Buffet is not the biggest ambassador of crypto we can use his famous adage here to help us when knowing when to time the market. The idea of any type of investment is to buy low and sell high. So, when should we buy? When do we know we have hit a new low?
Well, using previous bull runs as an example will help us understand how drops of 30% after gains of approximately 100% are not uncommon and actually occurred about 6 times during the recent bull run. If this were to follow the same pattern Bitcoin will reach about 200k during the peak of this run.
Many technical experts yesterday were predicting that Bitcoin could go as low as $42k. This mixed with all the positive news about Bitcoin and the sentiment still being bullish suggests that this would have been a perfect time to accumulate Crypto.
Why Institutional Support Of Crypto Is Great For The Market
The main reason that immediately comes to mind is the validation of crypto will make investors more confident that Crypto is here to stay. This will eventually make an asset like Bitcoin less volatile.
Additionally, the amount of money these institutions can pump into crypto is potentially huge and can really drive the price up. If these institutions buy at what they consider to be good prices it is more likely that these companies will not subject themselves to such huge risk.
Nothing is guaranteed in crypto but the fundamentals remain the same. Only invest what you can afford and accumulate when the market is settled or dipping.
Don’t wait until the prices start rising again because if you do will not be maximizing your profits. If this dip scared you a little, hopefully, the quick recovery will make you realize that it’s just par for the course with crypto.
