Analysts Caution “Buying The Dip” on Bitcoin Despite Stabilization
10X Research CEO Markus Thielen warns that buying the dip on Bitcoin is “too risky” post-crash. Meanwhile, other analysts point towards signs of stabilization.
Bitcoin experienced a massive downturn on Monday , causing chaos in the crypto market and prompting analysts to reassess trading strategies.
The bloodbath resulted from a complex interplay of factors , including the unwinding of the Japanese Yen carry trade, macroeconomic concerns, and mounting tensions in the Middle East.
Despite the downturn, there are signs that Bitcoin is stabilizing and potentially recovering . The Bitcoin price has rebounded to around $56,410.85 after dipping below $50,000 yesterday. However, analysts heed caution.
“Financial markets are like puzzles that need to be reassembled periodically, with new drivers of asset prices emerging,” Markus Thielen said. “This is one of those times.”
Thielen highlighted that this dip differs from those in April and June. While sharp declines were offset by increased leverage then, this might not happen now due to the current “slow trading” period.
“August and September are notorious for slow trading. Many institutional players are on vacation, and deploying large amounts of capital is the last thing on their minds,” Thielen added.
As a result, Thielin urges appropriate risk management as “critical” during this slow period.
“ Opportunities will likely arise once this period ends,” he said.
After Monday’s Bitcoin sell-off, analysts also highlight the importance of monitoring macroeconomic factors, particularly the rate gap changes between the Federal Reserve and the Bank of Japan.
The Federal Open Markets Committee (FOMC), which sets the target federal interest rate, won’t meet again until September
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