Bitcoin price rebounded on Tuesday after the dramatic sell-off that happened on Monday. The BTC price is trading at $43,273, which is about 8% above the lowest level this week. Other cryptocurrencies like Ethereum, Solana, Algorand, Vechain, and Hedera Hashgraph have also rebounded.
Buy the BTC dip?
Notably, the rebound of Bitcoin price has coincided with the overall comeback of stocks. In Europe, the DAX, FTSE 100, and CAC 40 indices rose by more than 1%. Similarly, in the United States, the Dow Jones and Nasdaq 100 futures have risen by more than 0.60% and 0.90%.
At the same time, the US dollar index and the CBOE Volatility Index (VIX) have pulled back as risks abate. The price action is happening as investors buy the dip after the sell-off happened. This sell-off was triggered by the US debt ceiling crisis and the Evergrande crisis.
Some analysts believe that the drop of Bitcoin prices was a good buying the dip opportunity. In an interview with CNBC, Michael Novogratz, the founder of Galaxy Digital said that investors should buy the recent Bitcoin crash.
He pointed to the fact that investors’ fear about the debt ceiling and Evergrande led to irrational sell-off of Bitcoin and other assets. At the same time, he pointed to the fact that Bitcoin had managed to stay above the important support at $40,000.
Most importantly, he talked about the significant inquiry about cryptocurrencies that his firm is receiving. Indeed, on-chain data shows that the number of Bitcoin transactions has risen. Similarly, the number of active non-zero balance Bitcoin addresses also rose. Also, the number of investments in cryptocurrencies and blockchain technology is rising.
So, is Novogratz right? First, we have to take his opinion with a grain of salt because he will benefit monetarily if Bitcoin and other cryptocurrencies rise. Second, like I wrote in my Ripple price prediction piece, this jump seems like a dead cat bounce.
Bitcoin price prediction
In my Bitcoin price prediction published on Monday, I noted that the coin will likely keep the bearish momentum going as bears target $40,000. This view was correct as the coin moved to that support level.
Today, the BTC price has jumped to $43,000. In my view, this performance is a relief rally, which typically happens after an asset makes a major decline. Besides, the coin is slightly below the neckline of the recent double-top and bearish flag pattern.
Therefore, while Bitcoin remains in a bullish trend, I think now is not the time to buy the dip as suggested by Michael Novogratz. I suspect that the price will retest this week’s low ahead or after the FOMC decision.
Contributors
