Time to buy Bitcoin as its value dipped: Experts
Cryptocurrency sees price correction after reaching all-time high of $58,000
image for illustrative purpose
Mumbai: Have you been waiting to buy Bitcoin for so long and were unable to buy due to the sudden surge in its price in the recent past? Then your wait is over and it is the time you bought the virtual currency. After reaching an all-time high of $58,000, Bitcoin saw a price correction on Tuesday. Further price correction is on the way and hence experts have advised investors to buy the dips and hold with a long-term perspective. No matter if the crypto currency sees further round of price correction in the near future.
Market Cap of cryptocurrency has touched trillion Dollar, its market liquidity in few billion dollars that makes it susceptible to market emotions. At present, bull momentum was a result of market hype, especially Tesla buying bitcoin and corrections are happening and dust is settling, feel the experts.
Commenting on it, Sumit Gupta, CEO and Co-Founder, CoinDCX, said, "This was expected as markets go through such correction cycles. However, the market showed signs of recovery after falling nearly 17 per cent. Investments in Bitcoin, like any other asset, should be from a long-term perspective as the fundamentals are still going strong."
Hence, it is advised that investors buy the dips and hold with a long-term perspective, he added.
Want to know the reason for the correction in the Bitcoin? Well, people have started to book profits and hence there exists a large sell wall in the market driving prices down. Bitcoin is a digital asset with no underlying value and therefore, the primary driver is market demand.
"I think, further price consolidation will happen in the upcoming weeks. India is the 6th largest trading market and as the story of legality unfolds, we may see a further dip in price. Across the world, the current price is facing resistance and further price correction is bound to happen as traders book more profits," says Gaurav Mehta, Founder, National Digital Asset Exchange (NDAX).
However, experts are of the view that price corrections are normal in financial markets. Vikram Rangala, CMO at ZebPay, says that price corrections are normal in financial markets, be it stocks, crypto or other asset classes.
There can be many reasons for such price movements. Bitcoin price has been consistently going up, albeit with lots of volatility, since crossing the previous all-time high of $20,000 in December to a price above $58,000 in February.
A price dip of around 19 per cent should be considered in the context of the larger long-term uptrend. Profit booking by early investors who bought at a lower price, as well as liquidation on the margin and derivative exchanges are also reasons for this price dip, Rangala said.
However, the quick bounce back above $53,000 levels from $46,000-48,000 price range confirms the intact bullish sentiment of Bitcoin. Such volatility in price will continue to exist and it is for this reason we always encourage investors to cost-average into Bitcoin and other crypto-assets, he added. A section of analysts have even suggested for adoption of a SIP approach to tackle the volatility in the virtual currency.
Bitex Founder and CEO Monark Modi said, "The overall mood on cryptocurrency is bullish as more global investors and companies back Bitcoin week on week. It is also expected that the all-time highs will be followed by price corrections due to the volatile nature of the digital asset. Bitex recommends a SIP approach to average out steep highs and lows being seen in cryptocurrencies, he added.
