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Bitcoin price has had a tough performance in 2022. After soaring to near his $70,000 all-time high in 2021, the price has fallen to around $20,000. This represents a drop of more than 68% from its all-time high. So should you buy BTC dips?
There are several reasons why the price of Bitcoin has plummeted over the past few months. First, Bitcoin crashed due to the US financial currency depreciation. Unlike 2020 and 2021, the US government has not announced a major fiscal stimulus. In 2021, the country offered trillions of dollars in fiscal stimulus, some of which ended with Bitcoin.
Second, the Federal Reserve’s action has caused the price of BTC to plummet. After years of keeping rates very low, the Fed has adopted a very hawkish tone this year. This year we raised interest rates by 225 basis points and started to shrink our balance sheet.
For most periods, risky assets tend to underperform during periods of high interest rates. In fact, all three of his major U.S. indices such as the Dow Jones, Nasdaq 100 and S&P 500 have moved into bear markets as stocks have fallen. Similarly, other popular assets such as gold and silver have also been lowered.
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Bitcoin demand, on the other hand, seems to have plummeted recently. For one thing, on-chain data shows that the level of activity in the network is declining. Additionally, results from companies such as Block and Coinbase show that the number of Bitcoin traders is declining.
So, should you buy a bitcoin dip? In my view, I believe you can start buying this dip using dollar cost averaging. One is that the coin appears to form a double bottom pattern. There are also signs that inflation is easing, and the Fed will start slowing rate hikes in the coming months.
The 4-hour chart shows that the BTC/USD price is forming a double top pattern, with a bottom at 17,708. In price action analysis, this pattern is usually a bullish sign. At the same time, the indicators of accumulation and distribution rose slightly.
Therefore, as long as the bulls hold above the key support of $17,708, the coin may start moving higher. But as I wrote on Friday, below this support, the coin will plummet below his $13,000.
