BTC Gets Walloped. A Buying Opportunity?

BTC plummeted 38% in the last seven days from $68,000 to $42,000, settling at around $50,000. What’s happening, and should you be concerned?

BTC is known for wild volatility, and its recent price swing led to a massive sell-off concluding with some exchanges incurring an outage. This wild ride lopped off billions of value before comments from prominent figures helped propel it back upwards.

Whether it be sentiment-driven fluctuations, a correction, or another driving force, the crypto world continues to impress with its wild volatility. Probit Global has tools available so YOU can capitalize on these swings.

Bituniverse Grid Trading allows users to place multiple buy and sell orders for a trading pair to maximize on the upward swings and essentially HODL during market downturns. The tool helps remove the hassles of manually setting up and managing trading as the bot will place strategic orders depending on market movements. Probit’s grid trading protocol enables traders to automatically and effortlessly buy low and sell high — an invaluable addition to your crypto trading toolbox.

Words can move the needle

Crypto is still greatly affected by sentiment. One could argue that the recent bounce-back could be partially attributed to comments from influential figures.

For example, Elon Musk’s recent tweet implied that Tesla retained the entirety of their crypto assets amidst the volatility. Cathie Woods, a notable fund manager that has quickly become the face of innovative, high-risk sectors, noted that she maintains a bullish outlook on Bitcoin despite the recent price decrease. Cathie went on to say that she still believes BTC can reach a $500,000 evaluation even during the current capitulation phase.

What is a capitulation phase?

The word capitulation means to surrender or yield. In the financial world, this term describes a turning point where traders give up on attempting to recapture lost gains due to a plummeting share price.

For example, suppose ETH drops 30%.

You have two options.

1. You can be patient and hope ETH begins to appreciate.
2. You can realize the loss through a sale and incur some financial setbacks.

If most ETH holders decide to wait, ETHs price will stabilize, and a floor will develop. However, if most traders capitulate and run for the hills, ETHs share price will see a dramatic decline.

Market capitulation is when the vast majority of traders choose the latter.

ETH has had a massive bull run recently. This colossal growth can be partially attributed to the booming DeFi sector and the proliferation of NFTs. With such rapid growth, there may come a time when holders want to realize their gains. This type of trading behaviour is typically referred to as a correction.

If you want to learn more about corrections and how ProBit Global has trading tools that enable traders to capitalize on this phenomenon, check out this article. This profit-taking can incite a quick fall of price, which leads to a capitulation phase and, ultimately, a healthy rebound.

Some traders believe that the perfect time to load up on tokens is after the dust settles from capitulation selling. This is because anyone who wanted to sell their shares — typically associated with forced selling due to margin calls in the stock market — has likely already sold. Based on this logic, the price should theoretically reverse its momentum up and to the right. Capitulation phases are an after-the-fact conclusion due to traders begrudgingly realizing their losses.

Are these market events good times to buy?

This depends on your long-term growth prospects for a project or token. In regards to BTC, Bitcoins volatility is a reflection of adoption processes. Since much of the world has yet to fully understand its functionality and accept that it could be the future of money, it remains subject to volatility. This process will continue for the foreseeable future or until its price discovery process stabilizes. Once we reach a particular level of consensus regarding the value of disruptive technology, volatility will wane, and global adoption will occur unabated.

You can see this by looking at BTCs 60 day volatility. Since BTCs conception, the volatility has been decreasing reasonably linearly, which is not a surprising result. The more an asset is traded and the higher its market cap, the less volatile it becomes. This is not to say volatility cannot occur, but the severity will decrease.

Time horizons are key

No matter how volatile an asset is, volatility should not be used as the sole determiner for buying or selling an asset. Your time horizon, whether it’s one month, one year, or ten years, should have much more weight in your decision.

If you plan on holding BTC for ten years and adamantly believe in its long-term growth and adoption potential, short-term volatility shouldn’t get you down. What matters is that your purchasing power is higher or equal by the time you sell; everything in between is irrelevant.

Use-cases don’t change with volatility. BTC’s potential to become the future day-to-day currency is still there. Ethereum’s capabilities to become an autonomous transactional layer remain. What changes with volatility is your buying power; that’s about it.