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Bitcoin- Buy the dip or not? Your guide to the bear market

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Bitcoin- Buy the dip or not? Wait and let the market decide
Source: Pixabay

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice

Capital preservation is of utmost importance to traders and investors alike. In times of such aggressive volatility, fence-straddling becomes a valuable skill. One would see multiple altcoins lose double-digit percentage points, and look to short the asset. Conversely, trying to time the bottom is also a hobby of scores of market participants. Especially in the case of Bitcoin and other crypto assets, catching knives could quickly turn painful.

100k BTC was sold in the span of five days as the LFG selling pressure fueled fear in the market. At press time, the downward momentum has not yet halted.

BTC- 1 Hour Chart

Bitcoin- Buy the dip or not? Wait and let the market decide

Source: BTC/USD on TradingView

Bitcoin had strong support levels at $32k and $29.4k but both of these levels have been breached and retested as resistance. Going forward, the $27.2k and $25.4k levels could act as support for BTC.

The trend of BTC is overwhelmingly downward on the charts, and in the next few weeks, it could drop to $24k or lower. A sign of a shift in momentum would be Bitcoin climbing back above $30k. However, that alone will not be enough to signal a trend reversal.

In the near term, more downside is to be expected. A move to the $29.4k-$30.2k area could offer opportunities to short or sell. Bear in mind that these would be scalp shorts if entered, as the time to short Bitcoin might not be after a 30% drop.

Rationale

Bitcoin- Buy the dip or not? Wait and let the market decide

Source: BTC/USD on TradingView

There was no bullish divergence visible on the hourly chart, as both the RSI and the AO continued to drop, to highlight the bearish trend strengthening. Both the RSI and the AO made lower lows alongside the price.

The OBV also made lower lows, to reflect the fact that sellers have been extremely dominant in the past few days.

Conclusion

A short-term play could be to attempt to short a revisit to the $29.2k area, with stop-losses just above the $30k mark. More risk-averse market participants ought to opt to sit on the sidelines and save their cash for the future.

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Akashnath is a Chemical Engineering graduate deeply fascinated by Technical Analysis and the crypto markets and enjoys studying price movements and trying to find patterns.

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