Short-Term BTC Price Action and Why it Won’t Matter Soon
Disclaimer: This article does not constitute financial advice, please consult a financial advisor for all your financial and investment-related needs.
There are those who don’t concern themselves with short-term crypto price actions, in particular, those who intend on holding for several years. Some among them may choose to buy when they perceive the market to be near the bottom and may hold off when the greed index (an indicator used to express confidence in the market) is off the charts.
Those who subscribe to the idea of DCA-ing (Dollar-Cost Averaging) buy at regular intervals; the idea is that if you’re holding for long periods of time, the highs and lows of the present become irrelevant to what’s to come, and the average cost will be dwarfed next to future gains.
Which begs the question: Is crypto that good of a technology to hold so confidently?
We wouldn’t be here if we didn’t have an answer to that question. While it’s true that the potential of blockchain technology and Web3 tend to be the subjects of exaggeration, if you look closely, you’ll find that even the most ludicrous propositions are based on sound and factual ideas.
DeFi, in particular, is a market that is primed to explode. The distributed open ledger, along with smart contracts, are changing the way people save, invest, transact, and conduct business. This technology has eliminated the need for trust in many aspects of life and will continue to do so as it evolves and advances.
At the end of the day, when you do business with traditional banks, financial institutions, the government, or your fellow citizens, a level of trust is required in other individuals whose motives cannot be read like lines of code, as is the case with Web3 dApps. In fact, the smart contracts that carry out all of these processes do not have any motives to begin with, just instructions to respond to various inputs and criteria.
This is what makes crypto such a promising technology, and why everyone from institutions to retail investors is buying the most popular and advanced cryptocurrencies in the market. Not only is the technology there, but there have hardly been other technologies that have been as essential to the optimal functioning of human societies, governments, and economies as one that manages to answer to the hardwired riddles that plague the minds of an imperfect and emotionally-driven species such as ourselves.
If, therefore, the long-term potential is there, then why does the short-term price matter?
With enough capital, short-term price action can translate to quick profits. These are often done by utilizing leveraged futures, where by accepting the risks of liquidation, traders can amplify their profits and benefit from minor price swings. We have a brief introductory article on spots and futures which you can read about here if you’re interested!
Aside from panicking newcomers who don’t have solidified confidence in the market, these price actions concern leveraged and futures traders the most. Whether they’re long or short on a specific asset, or on the market in general, when liquidation is creeping around the corner, every dip and pump counts.
Of course, we can’t discuss investing without discussing global markets and economic trends.
The war in Eastern Europe has shocked countries worldwide, and a combination of the resulting sanctions and supply chain issues have brought some economies close to dropping on their knees. Record levels of inflation aren’t to be overlooked either, as they, along with interest rates, are instrumental in determining the state of the market. Let’s also not forget how climate change is drying up rivers, stirring up heat waves, and causing droughts, further disrupting economies worldwide — particularly food markets.
All of these factors play a role in bringing about fears of a global recession, which some argue is now inevitable. When such events come to be, investors tend to sell off their riskiest assets to prepare themselves for difficult times, and since most investors expect others to do the same, this causes panic selling, and a downward spiral ensues.
Given all these factors, where is BTC heading? Here’s what to consider.
Crypto is already regarded as a risky investment by mainstream institutions, and these situations certainly put a strain on the market’s back. However, given all that is taking place in the world today, to see Bitcoin surprisingly hold the $23,000 price point is a feat worthy of applauding.
As of writing, it does occasionally touch the $24,000 and $22,000 marks, and for it to go past any of those two points is usually followed by major news and new developments. The relatively healthy endurance of BTC can most likely be attributed to the record levels of adoption taking place in the world today, with 2 countries already adopting it as legal tender within their borders.
It won’t be unreasonable to anticipate a $20,000 price point, it did manage to dip below that, after all. However, short-term traders should only likely be concerned if Bitcoin manages to fall below $17,000; but if there’s one thing that’s rung true since day 1, it’s that nobody can truly understand how this market functions.
Here’s why none of the short-term price actions matter.
If you’re a simple “hodler”, then you most likely do not concern yourself with the immediate price differences of fundamentally sound crypto assets. But we also understand that different people have different needs and approaches when it comes to the market and that it’s not wrong to trade for the short term — it’s just riskier.
But what if we reduced that risk for you? What if, even if the market crashed as much as 50% from this point, you’d still be able to trade and make profits? What if you could trade while sleeping, eating, or enjoying life’s simpler pleasures like sipping a cup of mellow tea on a sunny morning?
Sentient makes charts less intimidating, and given enough time, makes them irrelevant to the day trader. It helps investors hold both for the short and long terms, all the while reducing the stress and risks associated with trading. A combination of trading features, strategies, CEXes, and DEXes make Sentient a powerful tool, and paired with a machine-learning AI algorithm, it becomes a protocol no human could realistically outpace or outperform.
Want to get in on Sentient’s beta? Don’t miss out on the opportunity! Keep a close eye out for announcements, and let us know if you have any questions!