The article below was written by Muyao Shen and was posted on coindesk.com on May 17, 2021. Shen is currently a markets reporter at CoinDesk. Prior to CoinDesk, she covered the metals markets at Fastmarkets in New York City, while writing for Forbes Crypto occasionally as a contributor. She started her interests in the blockchain and crypto sector during her time as an intern at CoinDesk in 2018. She also worked in Beijing for a few international news outlets before attending the Graduate School of Journalism at Columbia University in 2017. She holds a small amount of bitcoin.

 

If you have been around the cryptocurrency space any amount of time you know the ebbs and flow of the market.

 

Seasoned Bitcoin holders buy the dip because they know that the market always recovers, and they know that you only lose when you sell your cryptocurrency asset at a price lower than you paid for it!

 

The only thing Elon Musk has done for the cryptocurrency space is bought more attention to it.

 

People who follow his advice should be very careful because his knowledge of the crypto space is not based upon sound reasoning, but his billions affords him the ability to make bad financial decisions that he can recover from.

 

Mr. Musk is a smart man who has put out F.U.D. (Fear, Uncertainty, and Doubt) about Bitcoin even as a holder of Bitcoin.

 

As a Cryptocurrency WHALE his words and actions have influenced the market twice in the las few months.

 

First, after buying $1.5 billion in Bitcoin, his word caused the oldest cryptocurrency to drop from approximately $61,000 per coin down to approximately $43,000 per coin only to recover to a high of approximately $64,000+ per coin.

 

His most recent words have caused yet another DIP in the price of Bitcoin and the cryptocurrency market; because we all know that what happens to Bitcoin, happens to the rest of the market!

 

The holders of DOGECOIN owe their thanks to Mr. Musk, but what happens when he grows tired of DOGECOIN and moves on to something else?

 

There will always be DIPS in the cryptocurrency market just like there are dips in the stock market and season Bitcoin holders buy the dip at every opportunity.

 

As always, conduct your own due diligence so that you make an educated decision instead of one based upon emotion.

 

DISCLAIMER: I am not a financial advisor, planner, or CPA, and I am not giving anyone investing advice, I am just sharing information I know and use in my own decision-making about cryptocurrencies. If you need financial advice, please seek the advice and guidance of a licensed financial advisor, planner, or CPA with knowledge of cryptocurrencies.

 

Read the article below, listen to the video, leave a comment, share on your favorite social media pages, and subscribe to my blog so that you can be notified when new content is added.

 

As Newbies Panic in Latest Bitcoin Correction, Old Pros Appear to Buy on the Dip

Elon Musk’s tweets spur the latest drop.

Muyao Shen

 

May 17, 2021 at 2:04 p.m. EDT         Updated May 17, 2021 at 4:10 p.m. EDT

As Newbies Panic in Latest Bitcoin Correction, Old Pros Appear to Buy on the Dip

Blockchain data shows that the latest bitcoin market correction, which sent the oldest cryptocurrency down by more than 35% from its peak price above $64,000, may have been driven by panic selling from investors who bought during the recent bull market.

“The bitcoin market is in a historically significant correction,” blockchain data analytics firm Glassnode wrote in a post on Monday. “There are strong signals that short-term holders are leading with panic selling.”

BTC/USD pair on Coinbase.

Source: TradingView, Coinbase

At press time, bitcoin (BTC) was changing hands at $42,860.11, down 9.65% in the past 24 hours, based on the CoinDesk 20. The steep price drop came after a series of tweets by Tesla CEO Elon Musk in which he initially failed to deny outright that his electric-car company has sold or could soon sell all of its more than $1 billion holdings of BTC. He later clarified that Tesla had not sold any of the holdings.

 

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On Wednesday, Musk announced that Tesla would no longer accept bitcoin as a form of payment because of concerns about its impact on the environment. The price fell by nearly 13% that day, or more than $7,000, on the Coinbase exchange, according to TradingView.

In the post Monday, Glassnode, citing several key blockchain data metrics, said that the market correction has been led by new investors who are selling in a panic.

The “short-term holder SOPR,” or STH-SOPR that filters for coins younger than 155 days, dropped well below the key threshold of 1, meaning that newer market entrants appear to have “panic-sold” and realized “significant” losses on their invesments, according to Glassnode.

SOPR measures the net profit/loss position of bitcoin outstanding. A reading below 1 implies that any bitcoin moved that day is on average selling at a loss. At the time of writing, while the SOPR for the long-term holders is also trending downward, the value is still above 4.

aSOPR versus short-term holder SOPR

Source: Glassnode

Bitcoin Long term holder SOPR

Source: Glassnode

At the same time, the number of accumulation addresses of bitcoin continues to rise, as the count of non-zero balance addresses dropped by about 2.8% – indicating that long-term holders are buying on the latest price dip, according to the Glassnode post.

The number of addresses with a non-zero bitcoin balance.

Source: Glassnode

With bitcoin still at a much higher price than it was during the last bull market, bigger capital inflows are needed to drive a full price recovery, according to Glassnode’s report

On the other hand, the blockchain data also might imply that the current correction could be “a larger time-frame pullback in a bull cycle.” 

“Weak hands capitulate,” Glassnode said. “And stronger hands recommence their accumulation of cheaper coins.”

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