‘The buy the dip strategy may be applicable, but there is no denying it still has risks.’
The cryptocurrency market remains bearish even though Bitcoin (BTC), the mother of all cryptocurrencies, managed to return to the $ 20,000 level recently after making a ‘Pandalela plunge’ to as low as $ 17,000 last week.
Following the bearish atmosphere, investors are still pessimistic about the cryptocurrency with concerns about the ‘domino effect’ from the sale of holdings to meet margin calls (MC) and cover losses.
Crypto Market ‘Domino Effect’ Situation
Reviewing crypto hedge fund, Three Arrows Capital to the Wall Street Journal over the course of the day, they are exploring all options including the sale of assets and seeking bailouts by other firms.
In addition, Asian crypto lender Babel Finance and lender from the United States (US) Celsius Network have also acted to delay withdrawals during the ‘bear’ phase of hitting the crypto market.
Clearly Adam Farthing of B2C2, if the credit withdrawal situation and lenders have to absorb losses from Celsius and Three Arrows, then it will reduce the size of future loan amounts which can lead to a decline in credit volumes in the crypto ecosystem.
The point was backed up by Solrise Finance’s Head of Financial Strategy, Joseph Edwards, saying most industries are preparing for the worst things to come.
Meanwhile, the fall in crypto was in line with the decline in equities following the US central bank's aggressive action to raise interest rates and increase the risk of a recession.
For the record, BTC is seen to tend to move in a similar trend to other riskier assets such as technology stocks.
Opportunity Over Narrowness
Although pessimistic, there are also some investors who see this bearish situation as an opportunity.
According to Andrew Brenner of National Alliance Securities, some investors are seen wanting to take the ‘buy the dip’ opportunity because BTC is at the bottom level.
At the time of this writing, BTC is seen rising 2.81% at $ 20,153.36 but recording a weekly decline of 5.27%.
