The Crypto Market: A Roller Coaster of Losses and Opportunities

The Crypto Market: A Roller Coaster of Losses and Opportunities

The cryptocurrency market experienced a sudden and significant selloff, resulting in the loss of almost $200 billion in market value. Speculation surrounding potential denials of Bitcoin exchange-traded fund (ETF) approvals by the SEC sparked this downward spiral. However, amidst the chaos, there may be an opportunity for dip buyers to finally enter the market.

At the early hours of the day, Bitcoin’s price began plummeting, triggering a chain reaction of altcoin liquidations. Bitcoin’s value dropped by nearly 10%, while altcoins suffered losses ranging from 20 to 30% from recent highs. As fear, uncertainty, and doubt spread, investors were left wondering about the future of the market.

During times of doubt, it is important to zoom out and observe the market from a wider perspective. Moving away from the daily timeframe and focusing on higher timeframes, such as the monthly, can provide a more reassuring view. While the daily chart may display a daunting wick, the high timeframe reveals a breakout confirmed by high trading volume.

After three consecutive years of declining volume, a high volume breakout becomes undeniably significant. This breakout could potentially signify the beginning of a bull run in the cryptocurrency market over the next few months. Volume plays a crucial role in confirming price breakouts when accompanied by technical indicators and chart patterns.

In the example provided, the 1M BTCUSD chart closed above the Ichimoku’s Kijun-sen, a situation that did not occur in 2019 but was observed in 2020 and 2021. Additionally, Bitcoin closed above the upper Bollinger Band, a scenario that only transpired in 2020. A close above the Bollinger Band, along with high trading volume, serves as a buy signal. More trading volume indicates a higher number of orders being filled, potentially due to the involvement of influential investors or widespread market participation.

All indicators point towards the current moment being an ideal opportunity to “buy the dip.” A green volume bar at the end of January would confirm a gain and further support the notion of entering the market at this point. However, it is essential to note that this analysis is for educational purposes only and should not be considered as financial advice.

The recent selloff in the cryptocurrency market has triggered alarm among investors. However, by taking a step back and analyzing the situation from a broader perspective, an opportunity for dip buying arises. The high-volume breakout, after years of declining volume, suggests the possibility of a bull run in the coming months. Investors are advised to conduct thorough research and assess the risks associated with cryptocurrency investments before making any decisions. The crypto market continues to be a roller coaster of losses and opportunities, demanding a cautious yet strategic approach.


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