Bitcoin Price Poised To Recover: Should Traders Buy The Dip?
Bitcoin, the world’s flagship cryptocurrency, has fallen by about $2,000 from its 2020 highs above $12K. The coin is currently struggling to hold support above the crucial psychological level at $10k.
The slip in BTC prices isn’t that surprising, given that September has historically been red for crypto markets as a whole.
BTC’s slip since Sep. 2 is mainly attributable to a massive selloff in the market. As per data from blockchain analytics firm CryptoQuant, miners are dumping their coins en masse as they anticipate the asset to correct lower.
Despite the poor performance in the past week, BTC remains well supported above $9,900 and $10,000. At the time of this article’s writing, the king coin has surpassed the $10,200 resistance zone to trade at $10,257.
BTC Plunge Correlates with Plunge In US Stocks
Amid the current retest of the $10K support which saw BTC hit new monthly lows at $9,850, US stocks have also struggled.
This uncanny correlation between BTC and stocks prompted Glassnode.com to advise traders to keenly follow the legacy market’s movements.
According to the analytics firm, stock indicators can guide them to determine the expected BTC price action in the coming weeks.
Bitcoin Bulls Defend Support at $10K
The dismal price action displayed on BTC charts can be misleading, and some traders may fail to realize that bulls are winning despite the battle looking grim currently.
Over the last few days, the BTC/USD pair has dipped below $10K but has always rebounded to close above this critical level. Therefore, the ongoing selloff has so far failed to penetrate and close below support.
Despite the bears’ repeated attempts to invalidate the support at $10,000, the defense by bulls over the last week is a show of fundamental strength in BTC markets.
This occurrence prompted Tyler Winklevoss, the Gemini exchange CEO, to conclude that BTC has formed a new baseline at $10K.
Bitcoin Fundamentals Are Bullish
Even with the considerable volatility across crypto markets, traders should focus on BTC fundamentals to look past short term price action.
Firstly, the world’s largest digital asset remains undervalued despite registering triple-digit percentage gains in 2020 and hitting an impressive market cap of $220 billion.
Bloomberg highlighted in their June outlook report that Grayscale Investment is aggressively acquiring BTC, having amassed more than 340,000 coins.
This accumulation shows that institutional investors see the asset as a “resting bull” and still has room to run in the coming months and years.
Other on-chain fundamentals confirm the bullish sentiment for BTC. For instance, the number of unique addresses on the BTC network is surging according to Blockchain.com data.
More importantly, on-chain analysis shows the flagship coin entering an accumulation phase as selling pressure subsides.
Finally, the BTC network’s mining hashrate has remained healthy over the past 18 months, characterized by a bear market.
Morgan Creek Digital co-founder Anthony Pompliano, confirmed that the underlying fundamentals on BTC look healthy. He argued that despite day-to-day BTC price volatility, the asset should see a long-term valuation uptick.
The fact that selling pressure is subsiding as investors accumulate coins points to an imminent BTC price uptick. Moreover, the bulls have successfully guarded the $10K level for seven days in a row, which shows the bears are losing.
The flagship digital asset has now reached a crucial inflection point as it approaches the $10.5K level of support. This price action indicates that BTC could recapture the $11K range after the ongoing accumulation phase comes to an end.
Dan Tapiero, the DTAP Capital founder, pointed to BTC’s maturation as a safe-haven asset amid rising global inflation and market uncertainty. He concluded that safe-haven assets like Gold and BTC should “hold up” as stock markets continue to tumble.
Therefore, it seems that investors have an excellent opportunity to buy the dip as BTC prices are likely to rebound in the coming weeks.