Bitcoin has experienced a price drop in a relatively short period of time after the crypto market fell to 2020 levels. That pushed the cryptocurrency to a yearly low of $17,500, down 75% from its all-time high, while Ethereum fell to $870, down 82% from its all-time high.
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This figure is the norm for a crypto bear market, Bitcoin is known for having experienced similar crashes in the past, and may indicate that it has completed a new market cycle. At the time of writing, Bitcoin is trading at $21,300 in the past 24 hours with a profit of 4%.
In a market update, trading desk QCP Capital if Potential scenarios for Bitcoin’s recovery from the crash. The company expects that the price of BTC may continue to rise as it climbs to previous levels.
Despite the downtrend, QCP Capital claims that BTC’s price reacted positively from the lows as it quickly broke above $20,000. In this sense, they see the selling pressure to bring BTC to $17,000 as “less leveraged liquidations and more miners reducing their inventories.”
Liquidations of leveraged positions often lead to price consolidation as assets take time to recover. In other words, the price of BTC is likely to continue to rise and is unlikely to stay in a particular price zone, as it has for the past month, when it was stuck at $28,600 and $31,500, respectively.
In addition, QCP Capital believes that the options market suggests that downside fears have eased. The trading firm claimed that the institution “represented a bullish structure of scale”, adding:
Macro factors are also providing near-term support. Oil prices have fallen from above 123 to below 110. Other commodities have followed suit. This is important because it reduces inflationary pressures and allows the Fed to ease its tightening stance. It’s a big plus for the market as a whole.
Is it time to buy the Bitcoin dip?
As NewsBTC reported, falling commodity prices could be a sign that the Federal Reserve (FED) and its monetary policy are having an impact on global markets. So, at least in the short term, lower inflation and give Bitcoin and other risky assets some breathing room.
Related reading | TA: Bitcoin is consolidating near a key mark, can the bulls succeed?
After a 75% crash, Bitcoin is usually at attractive levels to increase long-term holdings. However, investors should exercise caution and adopt a dollar cost averaging (DCA) strategy. In this sense, QCP Capital added:
We remain vigilant. Fund redemptions at the end of the quarter could put some pressure on prices, while more cryptocurrency bankruptcies may be found.