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Bitcoin isn’t the king of cryptocurrency for nothing. Most major cryptocurrencies have dipped incredibly low on Saturday, and that includes Bitcoin (BTC) but it doesn’t seem to budge.
Bitcoin was trading at $39,510 late Friday, down 4%, based on charts by Coingecko, which signals dangerous waters in trading. Traders have incurred monumental losses in equity with this trend.
It’s a consolation though that right now Bitcoin and other cryptocurrencies are frequently linked to stocks in terms of volatility in interest rates and market values.
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The Big 4% Dip for Bitcoin
Four percent might be too small to matter but it does to Bitcoin and all other cryptocurrencies. With that big dip, investors and traders are increasingly aware of the risks and have decided to wait on the sidelines and see what happens next rather than risk severe losses along the way.
However, not taking action at the right time can hurt and decrease market returns.
Altcoins also went further down compared to Bitcoin. Fundamentally, it is typical for altcoins to underperform when pitted with other cryptocurrencies especially BTC because it has a higher risk profile in comparison to BTC.
Despite Dip, Bitcoin Remains Stable
On a more positive note, technical indicators have shown that Bitcoin is meant to be more stable at $38,500 even with the reduced price momentum. Traders are always on the lookout for unexpected spikes in prices so the downtrend with BTC may make it entirely painstaking for options traders to generate profit in these erratic price swings.
BTC total market cap at $755. billion on the weekend chart | Source: TradingView.com
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Current trends circling the crypto and metaverse worlds can greatly impact how traders behave. For instance, when BitMEX co-founder Arthur Hayes said that there is an impending BTC price crash looking at around $30,000, there followed traders selling their BTC.
This caused traders to sell their May and June option calls like crazy causing the risk reversals to drop from -6% to about -10% for both Bitcoin and Ethereum.
Still A Bullish Trend
With Bitcoin’s lowest low registering the past couple of days, this also highlights the minimized bearish sentiment on the side of options traders. Traders being cautious at this point in time are fairly predictable.
Overall, the global cryptocurrency market trading activities have been significantly reduced at $1.88 with very minimal gains seen in the last 24 hours. Even so, the total trading volume rose to around 18%.
While the very strict monetary policy has negatively impacted speculative assets like cryptocurrencies and stocks, the indicators clearly show that it will stay bullish for a little while.
Featured image from EPA-EFE, chart from TradingView.com