The crypto market on Monday took a huge hit with several altcoins including Dogecoin taking a tumble of almost 20 percent after the price of Bitcoin went from peaking at $57k to go all the way down to $47K.
If you are new to crypto markets this might appear to be the end of the world. If this price movement occurred on a stock for example it will usually be because some news has proceeded it. With crypto though it is just par for the course.
What everyone needs to know is that some coins have seen gains this year as high as 4000%. This means that a retrace of 20% shouldn’t cause that much panic. For sure it does look ugly and if you have a significant amount of money involved your mind can wander to worse case scenarios but crypto has gone through this 1000’s of times already in its brief history.
Yesterday DOGE peaked at around $0.06 which was largely inspired by another cryptic tweet from Elon Musk as well as the continued rise in Bitcoin. Bitcoin then took a massive dip and when this happens all other crypto follows suit. This meant the price of DOGE went all the way down to $0.046411.
Taking Positives From Dips In Dogecoin
The major positive that comes from this sort of mass selling is that it removes ‘weak hands’ from the market. This means that when the market recovers more people are invested who plan to hold long term. When a price goes up so much in a short amount of time a certain number of people would have jumped on the train blindly and will ‘panic sell’ at the first sense of danger.
People who are familiar with the markets know that these are the best times to buy! This was such a wild swing it was almost inevitable that most coins would have seen a recovery to some degree. Dogecoin has already recovered to be at $0.053 at the time of writing. While Bitcoin has already made up for the majority of its losses and now is hovering around the $53k range.
Market Manipulation
When a big holder of Bitcoin sells a large amount of Bitcoin this often triggers panic selling throughout the market. This is a tested method by the richest investors and companies/organisations in the world and is referred to as ‘whale manipulation’.
These investors after taking profit can then buy-in at a lower price. Now we recognize this we can also benefit from this type of manipulation. When prices drop this significantly during a period of only a few hours it is always a good idea to buy more unless some news has triggered the sell-off.
It is always good to have some money set aside for buying the dips or alternatively the next time DOGE is going through a big spike you could decide to sell 10-20% of the profits and wait to see if this type of action occurs again as it most likely will.
