The first week of 2022 has brought bleak news to the crypto world. BTC and many other “blue chip” stocks are down more than 10% leading to 3-month lows. The question now arises, do we buy the dip? As cheesy as it sounds, the best time to buy is during fear and constant down days. Now the question of course is what do you do if it continues to dip. Do you buy more? That sound like the obvious plan.
The largest cryptocurrency has been struggling to gain momentum in every attempted rally in the past couple of months, and dropped Friday to nearly $41,000. The latest declines come after minutes of the Federal Reserve’s December meeting showed a potential for earlier- and faster-than-expected rate increases, up to three could be expected this year, as well as considerations about balance-sheet runoff.
According to a Bloomberg analysist, Lack of interest and demand due to the holiday season, tax-based selling and concern in the markets about the Fed’s potential actions are resulting in turn-of-year weakness, said Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno in Singapore. He expects levels between $38,000 to $40,000 to come into focus.
Others have contributed the sharp decline of crypto because of recent political turmoil in Kazakhstan, where internet has been completely shutoff. Although this seems to be a small catalyst overall to the crypto market. No doubt however, if tensions keep rising than this may be an increasing factor.
Right now crypto is going through a correction. Whether this is a long-term correction or temporary, is up to you to decide. In the last decade, Bitcoin has undergone several large corrections, including the current one. Each time, the dip has been smaller than the last, for instance the 2021 version resulted in a 56% decline. Market watchers should pay attention to $30,000, the point where the slide from the record high of nearly $69,000 would be equal in size to the previous correction.