Cryptocurrency Update: Are We Entering Another Steep Correction?

This question probably ran through a lot of traders’ minds yesterday evening and this morning amid the decline in Bitcoin, as the 30% correction in the currency that took place two weeks ago is still a very active memory. The correction dragged altcoins lower as well, so it isn’t a surprise that a lot of investors and traders got nervous.

BTC/USD 4-hour Chart Analysis

As we wrote in our previous update a yesterday:

BTC is at a very important point as a failed break-out attempt, and a break below the prior high could set up a quick decline towards the dominant trendline at $2500 or the top of the short-term base near $2350.

BTC broke below the prior high since then, and dipped almost until the $2600 level, before rebounding. To put this 10% correction into perspective, it didn’t even violate the previous swing low on the 4-hour chart, which is found just below $2500, so even the short-term uptrend is still intact.

So what’s next? The cryptocurrency is still in an uptrend both short- and long-term, so investors and traders should both be looking for buying opportunities. Ok, but should you buy, hold, or sell right now?

Well, it depends on your time-frame and your strategy.

Long-Term and Short-Term Strategies

BTC/USD Daily Chart Analysis

Is this the best time to buy Bitcoin for the long run? Probably not, even if the fundamentals are there and it will most likely rise much further than the current levels. So, why it is not a good idea to buy it then? Because a 30%-40%-50% correction, that has been normal for Bitcoin in the past, is a huge psychological burden that makes a panic sale likely, usually just before the bottom. Because of this, it is better to wait for the correction (it always comes) and oversold readings, even if you will buy it at a higher price later on.

Of course, not all strategies are binary (either holding an asset or not).There are many long- and short-term investment and trading strategies that can be successful in a roaring bull market like the one that the crypto-coin segment is experiencing, but mixing the time-frames and mixing trading and investing (see our article on the topic) could lead to troubles.

Let’s see some of the possible strategies:

  • Buy and hold, without caring about day-to-day (or even month-month) fluctuations
  • Buy and hold a core position and add on the major dips; a very powerful strategy
  • Buy a certain amount every week or month and even out your entry price, without the hassle of timing the market
  • Try to catch major turning points to reduce and “re-boost” your position
  • Trade short-term movements with stop-losses, targets, and strict risk management (this is trading not investing)

We are providing valuable information for all of these strategies (ICO analyses, short- and long-term recommendations, savings advice, and much more…) no matter which approaches you follow; but choosing your strategy—that is your part.

Stay tuned for our detailed cryptocurrency analysis later on today.

Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.