The Best Way to Tackle the Temporary Downtrend In Bitcoin (BTC)
Bitcoin (BTC) has been experiencing a temporary bear market with prices shooting down to the south. The price of BTC is currently at around $48k, which is a 40-day low. Experts are optimistic about Bitcoin’s price forecast and believe that this bearish run could be short term. In this article, let’s understand what you should do while BTC continues its downward rally. But before that, let’s quickly analyze the BTC/USD pair to have a fair idea.
Bitcoin Technical Analysis
BTC/USD | 4-hour Timeframe
On the 4-hour timeframe, we can see the organic takeover of sellers on the BTC/USD pair in the past few days. Ever since Coinbase went public in the last week, this downtrend has started, and most of the altcoins are facing a similar situation. At the time of writing, the price of Bitcoin (BTC) was hovering around the $48k mark. The 10-period moving average was above the price action on this timeframe, and it is a clear indication of seller domination at this point. If you are a scalper, consider scalping against BTC because that is the current short-term trend.
We can see the formation of a bullish candle on the right, which indicate the buyers’ fight to make a comeback. The price action could reverse by taking support at the $50k level, or it could even reach the $46,138 support with current selling pressure. The nearest resistance for this crypto pair is at $57k, and it’s current all-time high at $64.719. According to expert opinion, Bitcoin is expected to break these resistance levels and make a brand new ATH shortly.
BTC/USD | Daily Timeframe
We can see the series of higher highs BTC/USD has made on the price chart on the daily timeframe. The last high was above its previous high, making a brand new all-time high value, but the pullback was over 100%. The price could now take support from its current position or at the $46,138 level before shooting up to the north. Experts believe that BTC/USD is still very much in a bull run and is expected to resume the same shortly.
Invest in Appropriate Altcoins
A couple of days ago, the dominance rate of Bitcoin in the crypto market went below 50% for the first time since September 2018. This implies the interest of crypto enthusiasts over the altcoin space. It is a known fact that a few altcoins have outperformed BTC in 2021 with triple-digit growth. Also, we can observe the correlation mismatch between Bitcoin and other popular altcoins. For instance, Ether (ETH) made a brand new all-time high yesterday while BTC got down by about 20% from its ATH.
DeFi exchanges are doing as much volume if not more than Coinbase today.Thomas Farley | President, New York Stock Exchange
Now let’s look at the technical analysis of one such potential altcoin, which you could look at during the BTC crash. Band Protocol (BAND) has seen a growth of 315% since the beginning of this year. By looking at the below price chart and the moving averages, the price action on this crypto is currently being consolidated. The price movements are ranging between the $21 mark and $11 mark.
According to expert analysis, the price of BAND could take support from its current position or could even go down to $11 before making a new all-time high value. Most of the predictions concerning BAND price are pretty optimistic, and this crypto could reach the $28 mark by the end of May. Thinking of holding BAND and take advantage of future price movements? Visit our credible list of Exchanges to buy BAND for the cheapest possible price.
Pro Traders Aren’t Buying or Cashing Out Profits At $50k level
Throughout 2021, we’ve noticed that whenever BTC dropped about 25%, bullish traders would flock to the market, pushing it to new historic highs. This was evident in the drop from January 8 to January 27, the dip from February 21 to February 27, and the drop from March 13 to March 25. All these instances preceded a bullish trend pushing BTC to newer highs.
However, the recent bear run from April 14 to April 23 has pushed Bitcoin below $50,000 for the first time in 47 days. Most analysts attribute this to the upcoming BTC options expiry set for April 23 (today), estimated to be worth $1.55 billion. The sustained downtrend can be linked to the fact that BTC bears had bets of about $340 million for a price below $57,000.
Over the past nine days, BTC has dropped about 26.4%, but pro traders in the spot market have not been actively buying nor selling. There have been no clear price points where pro traders have been actively buying or selling BTC. In the past, we noticed that pro traders accumulated their BTC positions during price pullbacks. The long-to-short net positioning data from Binance, Huobi, and OKEx shows that pro traders increased their spot, margin, and futures contracts between April 14 and April 17. During this period, BTC was trading above $60,000.
As BTC touches levels below $50,000, it might present an ideal entry point for bullish pro traders, whales and arbitrage desks to flock back to the market and add on to their long positions. More so, as the $1.5 billion BTC options expire on April 23, we can expect that BTC will rebound in the short term.
HODL But Don’t Keep Your Assets Idle
The historically high unemployment rate probably gave rise to the popularity of crypto lending during the COVID-19 pandemic. Several centralized and decentralized crypto lending platforms allow those HODLing to lend out their portfolio to and earn interest. Crypto HODLing involves buying and holding onto your crypto portfolio for a longer period, as opposed to speculative day trading.
Typically, most crypto holders would only let their cryptos stay idle in cold wallets waiting for them to appreciate. While this strategy is effective in the long term, it is not always bulletproof. Case in point, BTC shed about 520% between December 2017 and January 2019. If BTC holders had lent out their portfolio, they would have earned a significant interest on their portfolio, which might have offset the losses.
With Ethereum, crypto staking has become the most popular lending method. Depending on the type of crypto you lend and the platform you use, you can earn up to 0.1999% per day from crypto lending. This is better than HODLing in cold storage. Here are some of the things to look out for when selecting the crypto lending service:
- The fees charged and the minimum lock-in period
- The frequency and percentage of the interest
- The minimum deposit
- The security and legal safeguards of the platform
We hope you find this article useful and informative. In case of any questions, please let us know in the comments below. Cheers!
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