Top digital coins, including Ethereum and Bitcoin, dropped their values with double-digits as concerns and profit-taking translated to an almost one billion dollar worth of liquidation among the cryptocurrency market. Time for dip-buying?
The pre-Christmas crash in the crypto markets agitated investors, diminishing their risk appetite. The digital coin market is the latest to suffer global selling pressure as market players avoided riskier investments.
Top crypto assets, including Ethereum and Bitcoin, witnessed their price falling by double-digits amid profit-booking and concerns that triggered a massive sell-off across the entire cryptocurrency marketplace.
India Blockchain Alliance founder Raj A Kapoor stated that the sudden decline by BTC and other cryptocurrencies follows a massive fall in the United States stock market. He added that speculation that the much-awaited Fed Reserve tapering might puncture BTC and the cryptocurrency bubble dominated the market. Tapering is the gradual decrease in large-scale asset buys by Fed.
Nevertheless, the digital currency space saw a sharp recovery over the past few hours. Most assets recovered the losses, while others recorded mild gains from their lower price levels.
Market experts advise domestic investors to use the current prices as dip-buying opportunities. However, individuals may need to stick to quality and player long-term investment games.
According to Coinmarketcap’s data, BTC plummeted to hit $42,800 levels on Saturday. However, the dominant crypto climbed to the $49,000 value area early Sunday. Also. Ethereum touched $3,500 during the crash before surging to price areas past $4,100.
Itsblockchain.com founder Hitesh Malviya stated that news related to COVID affected risky assets such as Bitcoin, which has a high correlation with the entire market. However, that is on a market viewpoint alone.
Malviya added that the crypto space recorded a quick recovery than the previous retracement. It took six months for restoration when COVID-19 hit the economy and less than two months following the 2nd wave.
BTC and smaller digital tokens remain massively volatile than traditional markets. The likes of ETH, BNB, SOL, ADA, and XRP bounced by double-digits in a few hours. Among the top gainers are Unus Sed Leo, Decentraland, Terra, and Helium, surging between 10-23% over the past day. Dollar-tied USD Coin and Tether saw marginal gains, providing relief and hope to investors.
Long and mid-term investors can take this as an opportunity to accumulate in small lots. That is according to Kapoor. He advises traders to use 5% over the investment portfolio in cryptocurrency endeavors. He stated that investors that use the buy-hold strategy expect these swings.