It was a brutal weekend for the cryptocurrency market, which saw heavy liquidation following the release of US inflation data on Friday. At the time of writing, Bitcoin (BTC) was down 6.57% at $25,673, hitting an 18-month low. On the weekly chart, bitcoin has corrected by more than 18%.
However, some technical indicators suggest that now might be the right time to buy BTC, especially for long-term holders. Cryptocurrency analyst Lark Davis says bitcoin’s relative strength index (RSI) has reached oversold territory for the first time since 2018.
Another interesting point Davis made was the very low trading volume as the BTC price dropped to $25,000 today. From here, a reversal could happen at any time if buyers got in. Unfortunately, buyer participation appears to be low so far.
As with the U.S. inflation data released Friday, bitcoin commentator and gold advocate Peter Schiff predict a sharp decline in BTC. He advises investors not to buy on price declines. Schiff writes.
This could be a tough weekend for #crypto. Bitcoin seems on track to drop to $20k and #Ethereum to $1k. If that happens, the total market cap of nearly 20,000 digital tokens would drop from nearly $3 trillion to under $800 billion. Don’t buy this dip. You will lose even more money.
What should bitcoin investors do?
At this stage, the cryptocurrency market is very volatile and unpredictable. Moreover, it corrects faster than the US stock market. Given the high inflation in the US, the Federal Reserve could raise interest rates quickly.
However, this also carries the risk of the USA falling into recession. In this scenario, there could be a further sell-off in US equities, which could also put selling pressure on cryptocurrencies. Antoni Trenchev, co-founder and managing partner of cryptocurrency lender Nexo, said.
“Cryptocurrencies remain at the mercy of the Federal Reserve, dancing merrily with the Nasdaq and other risk assets. We’re hearing bitcoin predictions that are heading for 100,000 and single digits, which tells us what kind of macro environment cryptocurrencies are facing for the first time and how big the fear is.”
However, some analysts believe this could be a good time to add more sats, but with caution: Rick Bensignor, president of Bensignor Investment Strategies and former strategist at Morgan Stanley, said.
“Normally, I would recommend being a buyer here. But if you’re going long, you might want to go long calls or short puts to limit the risk. If that dips, there’s no reliable support nearby.”
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