Bitcoin Dips to 2-Month Low: What Should You Do Next?

Hey there! Did you know Bitcoin’s price recently dropped to its lowest point in two months? It went from $63,800 to $54,005 on 5 July, causing a lot of concern among investors. If you’re a beginner in crypto, you might be wondering what to do next. Let’s break it down so you can make smart moves with your investments.

Bitcoin’s price took a significant hit, and this article will explain why it happened and what it means for your investments. By the end, you’ll know how to react during these market dips, helping you make profitable decisions in the crypto world.

1. Why Should You Care About Bitcoin’s Price Drop?

This recent drop in Bitcoin’s price is a big deal because it shows how unpredictable the crypto market can be. But don’t worry, understanding why this happened can turn a scary situation into a learning opportunity.

• Market Sentiment: The market’s overall mood can greatly impact Bitcoin’s price. For instance, news and rumors can cause prices to spike or plummet.

  • Example: During the COVID-19 pandemic in March 2020, Bitcoin’s price fell to around $4,000 but bounced back to over $20,000 by the end of the year.

• Derivatives Market Insights: Despite the drop, traders remain hopeful about Bitcoin’s recovery. For example, the BTC futures premium remains at a neutral 7.5%, indicating balanced market sentiment. This optimism is a good sign.

  • Past Example: In 2018, Bitcoin futures data showed trader optimism, leading to a recovery phase.

• Global Economic Factors: Things like regulations or market demand can also affect Bitcoin’s price.

  • Example: In 2021, China’s crackdown on crypto mining caused prices to drop, but the market eventually adjusted and recovered.

2. Making Sense of Market Trends

Imagine you’re a sailor in a storm. To make it through, you need to understand the weather patterns. The same goes for navigating the crypto market.

• Historical Data: Looking at past trends helps. Bitcoin has dipped before and then recovered.

  • Example: In 2017, Bitcoin fell from nearly $20,000 to about $6,000 but rose again to $14,000 in 2019.

• Market Analysis: First, the BTC futures premium is at a neutral 7.5%, showing balanced sentiment. Second, traders should also consider the options markets to assess investor sentiment. A rise above 8% in the 25% delta skew metric suggests a bearish outlook, while a negative 8% indicates heightened optimism.

• Stablecoin Data: Normally, high retail demand for cryptocurrencies causes stablecoins to trade at a premium of 2% or more above the official U.S. dollar rate. Conversely, a discount usually signals bear markets. The stablecoin premium in China rised from negative to neutral suggests renewed buying activity.

  • Example: In mid-2021, stablecoin premium data showed similar patterns before Bitcoin surged to new highs.

Learn how to use market cycles and profit from trading? Check out this newsletter that I used personally. Works very well.

3. Is This Good News or Bad News?

Point 1: Short-Term Volatility vs. Long-Term Growth

Short-term drops might seem bad, but they can be buying opportunities. Historically, Bitcoin rebounds to new highs after significant dips. In 2020, Bitcoin dropped 50% in a day in March but hit over $29,000 by December.

Point 2: Market Corrections Are Normal

Market corrections help stabilize the market. Knowing this can reduce panic and help you make rational decisions. The 2017-2018 correction saw Bitcoin fall sharply but set the stage for future growth.

Point 3: Indicators of Future Recovery

Futures premiums and stablecoin data suggest potential recovery, guiding you on when to invest. In 2019, futures data showed optimism, leading to a price increase in 2020.

Conclusion

The biggest lesson from Bitcoin’s dip is that market fluctuations are normal. Understanding these changes can help you make profitable decisions.

Your Next Steps

1. Subscribe to Crypto Profit 101 Newsletter: Stay updated with daily insights and expert predictions.

2. Open a Crypto.com Account: Crypto.com offers a secure wallet and competitive fees, making it easier to manage and grow your investments. I use this app to buy my spot crypto personally, and I feel you should too.

3. Evaluate Your Investment Strategy: Use this dip to reassess your strategy and consider to start dollar cost averaging and accumulate Bitcoin.

Final Thought: The crypto market is like a rollercoaster, full of ups and downs. With the right knowledge and strategy, you can navigate through it successfully. Stay informed, stay patient, and make smart investment moves. Happy investing!