Whales Do "Buy the Dip" When Bitcoin drops in price
Navigasi - Amid the ongoing crash of crypto assets, on-chain data shows that the so-called Bitcoin whales have been quietly filling their bags.
|Whales Do "Buy the Dip" When Bitcoin drops in price|
The leading cryptocurrency at the time of writing is trading under $20,000, down 35% year-to-date, and down as much as 71% from its all-time high of around $69,000 in November last year.
During a massive sell-off like this, many investors liquidate their positions. However, this does not appear to be the case for those with more than 1,000 BTC.
A whale buying Bitcoin cheaply could theoretically signal the return of a new bull cycle. Is the bull market coming soon?
The crypto asset market in the middle of this year tends to decline. However, crypto asset investors do not need to worry because a declining market or what we call a bear market is not always bad.
Based on Indodax trading data on Thursday (12/5/2022) at 19.00 WIB, Bitcoin prices are around Rp. 413 million and Ethereum is around Rp. 28 million.
Indodax CEO Oscar Darmawan said the decline in crypto prices was basically due to more selling than buying by investors, so there was more supply in the market than demand. However, this massive selling action certainly occurred due to the negative sentiment that occurred recently.
“I think the negative sentiment that caused crypto to decline the last few days was due to the Fed's policy of raising interest rates. This policy aims to reduce inflation in America which is soaring," he said, Friday (5/13/2022).
"Therefore, it is not surprising that the whales (a term for investors who invest in large amounts of crypto, ed) choose to sell their crypto assets and leave first," said Oscar.
Seeing the crypto market which is currently declining significantly, Oscar assesses that investors tend to wait so that the movement of the crypto market itself tends to move slowly so that it can be bullish again.
At times like this, there are some trading tips that can be used when dealing with a bearish market. Oscar said that in crypto trading or anything else, money management is very important whether the market conditions are bearish or bullish.
"If an investor has good money management, after all, market conditions will not affect him too much," he said.
"In fact, if someone has bad money management, even when the market is green, he will not reap profits. So, someone needs to have good money management, so that they can understand when to return to the market according to the budget and investment plan that has been made, " he said.
Then the second tip, investors can also take advantage of this condition by buying crypto because the price is being discounted. This term is often referred to as buy the dip.
"Buy the dip conditions are usually carried out by several institutional investors such as Microstrategy Inc or the country of El Salvador, which has several times bought bitcoin for their country's foreign exchange reserves when the price is being discounted. After investors buy the crypto, investors can keep it, and sell it when the price rises later," said Oscar.
According to him, often when the market declines like this, there are times when the price of Bitcoin and others suddenly increases drastically and doesn't go down anymore. Analysts still mention that there is still a high possibility that Bitcoin and other cryptocurrencies will rise suddenly and drastically. If you look at it historically, a bearish pattern like this will still happen and will most likely be followed by an All Time High again later," he said.
By using the buy the dip trick, investors can increase their crypto portfolio. However, investors want to do the buy the dip technique, Oscar advises investors to be careful, keep using cold money, choose crypto assets that have good fundamentals and have large capitalization, and stick to the trading plan that has been made.
Finally, investors can look at other crypto assets that are not affected by the Bitcoin price drop. "Indodax gives its members a choice by investing in short tokens, in which the short token system is the opposite of a crypto asset. If the cryptocurrency goes down, the short crypto token will go up and vice versa," he said.