The cryptocurrency market is experiencing a pullback, and one of the biggest stories is Genesis, one of the largest lending desks in the space, withdrawing loan origination for debtors, which could lead to a financial crunch for them. There are still a lot of crypto collateralized debt obligations that could continue the contagion domino effect and liquidity crunch across the industry, so it’s wise to dollar-cost average throughout the slump. The next Bitcoin halving is expected in April 2024, historically bottoming around 477 days prior, implying a trough around the turn of the year. Buying the bottom is overrated, and it’s better to wait for an uptrend for serious investment.
Breaking Down the Pullback in Cryptocurrency Markets
Foreign Guys are warning traders and investors about the current pullback in cryptocurrency markets. They mention that this was mentioned on the previous show and advised traders that it could happen anytime.
The most important story is that of Genesis and Dylan Leclair, who believes that people are missing how big the Genesis news is. It is one of the biggest lending desks in the industry, and the withdrawal hold will lead to more balance sheet impairment. The lack of new loan origination going forward will lead to a financial crunch for debtors, perpetuating a contagion domino effect.
Traders and investors are left wondering if the market bottom is in or if they are close to it. Dan Moorhead from Pantera Capital believes the next Bitcoin halving will occur in April 2024, which implies a trough around the turn of the year. His advice is to dollar cost average and wait for the hardening, where the mining reward for Bitcoin changes, causing prices to go up.
Buying the Bottom
Crypto Crit tweeted that buying the bottom is overrated since markets can continue to chop, eroding your mental capital. It advises waiting for extreme mispricing or extreme strength before making major entries. However, the tweet also recognizes that traders love to buy the bottom anyway, ignoring their own advice, and trying to capitalize on the thrill of the game.
Looking at the chart analysis, the potential zones for the bottom of Bitcoin line up perfectly within the liquid zone on the left, between $10,000 and $13,000. A strong area of support needs to get hit before major entries can be made, as the downtrend continues to remain strong.
In summary, Foreign Guys advise playing it safe, dollar-cost-averaging throughout the slump until the hardening occurs. Traders should wait for a strong area of support to make major entries and consider waiting for an uptrend to begin before investing as it is safer. Ultimately traders should not ignore their own advice and risk mismanaging good entries.