Trader comforts the market’s traumatized first timers amid falling prices
Bitcoin’s recent 28% drop has been a somewhat harrowing experience for some first time buyers.
Known for its volatility, Bitcoin (BTC) recently fell more than $11,000 over a four-day period after weeks of soaring price action. Amid a fresh bull cycle, Bitcoin has likely picked up its fair share of new buyers — some of whom may not be familiar with the asset’s wild price swings, according to comments from Cheds, a crypto trader and analyst on Twitter. Cheds holds a level I CMT certification — a benchmark showing technical analysis knowledge.
“Given the recent surge in popularity of Bitcoin, we have many new investors and traders who have not been through any shock events, like that $8,500 daily range candle we just had,” Cheds told Cointelegraph.
Bitcoin surpassed its 2017 all-time price high in December 2020. In the following weeks, the asset doubled its former high near $20,000, tapping just shy of $42,000 on Jan. 8, based on TradingView.com data. This is likely due in part to big players from traditional finance buying Bitcoin in the second half of 2020. Metrics from crypto data site The Tie suggest a recent flow of retail money may be a contributing factor as well.
“The true believers and really anyone who understands the supply/demand imbalance loves these volatility events, because it allows them to re-enter or add on to previous positions,” Cheds explained.
“As institutional accumulation continues to increase and the daily active trading float continues to decrease, the upwards bias for Bitcoin should continue, and, in my views, all dips should be accumulated.”
Other industry participants have noted that Bitcoin dips are common, and are pointing to the recent correction to help guide expectations.
A visual of the 2016-2017 #bitcoin run up
Take away: Pullbacks are a part of any healthy bull market #HODL pic.twitter.com/W2F6T0zJxL
— Altcoin Daily (@AltcoinDailyio) January 11, 2021
Although Bitcoin has historically been synonymous with sizable price swings, its advancements past $20,000 have opened the door for higher dollar oscillations.