After Bitcoin Carnage: Overcome the Worst?

After the biggest wave of sales since the Corona crash, the crypto market is fighting to limit damage. An end to the panic sales does not yet seem in sight.

If the crypto market has consistently shown its bright side over the past few months, the volatility trap has snapped shut practically overnight with full force and has reset the return pointer of many investors to zero. Elon Musk probably got the ball rolling beforehand, and it occurred to him ad hoc that the BTC life cycle assessment did not quite fit his company’s image after all. However, the Chinese government finally caused an avalanche, once again pulling a Bitcoin ban out of the drawer and thus causing panic sales on the crypto market. As a result, total market capitalization has collapsed by $ 400 billion in the past 24 hours. With price reductions in the single-digit percentage range, the coins are currently still well served. Of the ten largest cryptocurrencies, Polkadot was the worst hit with a minus of 12 percent. With Bitcoin, Ethereum and Co., 24-hour losses between 15 and 25 percent are the order of the day.

A dearly bought rally

The fact that the market is giving way so drastically after weak Nasdaq guidelines, Musk’s change of heart and the not very fresh Bitcoin ban from the Far East shows how fragile the ground was on which the rally towered. Especially for new investors who got on in the middle of the Bull Run, the biggest crash in over a year will be an acid test. Old crypto-hands, on the other hand, are likely to have been less surprised by the correction. The fact that quite a few top coins have dropped by a quarter in value is atypical even for crypto conditions, but not a novelty.

The rally on altcoins in particular has created a dangerous drop in the last few weeks that has moved further and further away from the fundamental value of some coins. In other words, many cryptocurrencies are dramatically overvalued. The receipt is now all the harder. Meme coins such as Dogecoin, Shiba Inu or Safemoon have lost between 30 and 40 percent of their value overnight. After weeks of pumping, now comes the dump.

Bitcoin dominance is catching up

The old season has been reflected in the Bitcoin dominance, which has been falling for weeks. At the beginning of the week, the BTC share of total market capitalization fell to 40 percent, its lowest level in over three years. The altcoin dump could gradually restore the balance of power in the market. Bitcoin dominance has increased by almost five percent since Monday. At least for the moment, most investors are orienting themselves back to the crypto draft horse.

Buy when the cannons thunder?

At this point in time, however, it is not possible to reliably predict whether or when the bottom will be reached. At the moment, panic sales still dominate the overall scene. There can hardly be any talk of profit-taking anymore. The Bitcoin rate has meanwhile collapsed to $ 30,000 and has thus fallen to less than half of its record high.

For repeat purchases, however, the moment seems more favorable than seldom in the past few weeks. However, this does not only require a strong nerve, but also a good portion of confidence in the medium-term price development. With regard to the hourly chart, optimism is at least slowly emerging again. Bitcoin has bounced back from its lows, rising to $ 35,000 at press time.