Is it a good time to purchase Bitcoin?: Bitcoin prices continue to be highly influenced by the Federal Reserve’s latest statement on January 6 about possibly rising interest rates as soon as March. The flagship cryptocurrency has maintained a price above the early December print of $42k.
This was a weekend action that sent shockwaves around the globe on Saturday morning. However, Bitcoin prices have been unable to sustain gains above the $52k mark since then, and a pattern of recurring support near the $45k level has surfaced many times in recent weeks.
Similarly, the marginal reaction to that assistance has dwindled over time. Before the Christmas break, the $52k level was retested.
The bounces have become increasingly brief as price action rapidly returned to support, signaling that bulls are running out of steam and may soon be unable to defend support. We are currently in a descending triangle, and bearish breakdowns are frequently anticipated.
According to the Crypto Fear & Greed index, which has been reduced to 15, there is a “tremendous amount of institutional demand on the sidelines.”
Certain investors are predicting a lengthy bear market, triggered by low activity.
Bloomberg commodity strategist Mike McGlone notes that while stimulus reductions are often negative for risk assets like as stocks and crypto assets, he believes Bitcoin might outperform other currencies in such a scenario:
“Cryptoassets are the riskiest and speculative investments available. When risk assets fall in value, inflation falls. Bitcoin, if it becomes a worldwide reserve asset, maybe the principal beneficiary of such a scenario,” he stated.
Despite a little optimistic undercurrent in supply dynamics, on-chain data indicate a general lack of activity. Meanwhile, illiquid currencies are migrating in large numbers to dormant wallets, and investor profitability and cyclical measures are becoming increasingly pessimistic.
We anticipate continued sideways consolidation through 2022, despite the presence of bull and bear indications.
Additionally, the 39.6 million non-zero addresses represent a 40% increase over the peak reached at the end of the 2017 bull market, suggesting that the user base has continued to grow over the last five years.
As the daily activity graph demonstrates, the number of active on-chain entities has finally surpassed 275k each day. On the chart below, a ‘bear market channel’ may be seen in red. Even when costs are low and relative interest is low, network users continue to grow.
Given Bitcoin’s parabolic nature, predicting whether it will hold or break on its next test is impossible. This is a tipping point, and it should be treated as such. If sellers pass the next test, the door to more serious breakdowns may swiftly open.
That being said, you should assess your crypto investment strategy and ensure you understand what you are investing in before purchasing the pioneer cryptocurrency, although it is one of the world’s best-performing mainstream financial assets.
The question Is it a good time to purchase Bitcoin had been answered. Therefore, Invest for the long term, not out of fear of missing out. Avoid investing more than you can afford to lose, enter at a reasonable price, and diversify your investments to share the risk.