According to analysts, bitcoin (BTC) is currently giving signs that indicate it is approaching a bottom. Therefore, a question arises: should we buy at the heart of this dip? Should we rather wait for the trough to pass before investing? For experts, the first solution is preferable. According to them, buying the dip is “a wise move given the strength of the dollar and other factors.”
The dollar can still strengthen
Since the collapse of the Terra ecosystem, everything is bad in the cryptocurrency market. The prices of bitcoin (BTC), ether (ETH) and altcoins all went down. Bad selling started to pile up from the end of 2021 as the US dollar gained strength and the US Federal Reserve hinted that it would raise interest rates throughout the year.
According to a recent report from Delphi Digital, the 14-month RSI of the DXY has now “crossed the 70 mark for the first time since its rise from late 2014 to 2016.”
Why is this news important? It is because 11 of the 14 cases where this has happened previously “led to a stronger dollar – 78% of the time over the next 12 months,” indicating the possibility that the pain for the assets could worsen.
On average, the DXY gained around 5.7% after its RSI broke above 70, which based on the situation as of May 13, “would put the DXY index just off 111, its highest level since 2002”. “Assuming the correlation between DXY and bitcoin remains relatively strong, that wouldn’t be good news for the cryptocurrency market”, says an expert.
It is time !
Even though the outlook seems bleak for the king of cryptocurrencies, analysts want to remain positive. Indeed, if we look from a global point of view, bitcoin is currently retesting its exponential moving average (EMA) at 200 weeks, nearly $26,990, which has “Historically served as a key area for price dips”, according to Delphi Digital.
Separately, bitcoin is still holding above its long-term weekly support range of $28,000-$30,000. However, this zone has always been a solid support zone for cryptocurrency.
While many traders have been panic selling in recent days, Pantera Capital CEO Dan Morehead took a contrarian approach: ” It is better to to buy when the price is well below the trend. Now is one of those times.”
The cryptocurrency market is in an unstable period and bitcoin (BTC) is no exception. For analysts, now is the time to invest in this digital asset, even if the situation does not really seem to lend itself to it.
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