Bitcoin drops below $38,000 as altcoins bleed

Market correction likely to stretch into March; Investors require patience to ride this out
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2022 has already offered a roller-coaster ride to crypto investors. While Bitcoin (BTC) shed more than 15% in January, this month offered hope for a strong rally towards $50,000. BTC has reacted to wider uncertainties hampering the global financial markets and has declined by 15% in the last one week to trade near $37,500 today. Today, we analyze the recent price actions of major cryptocurrencies and what investors can do in the short term.

Bitcoin hits a downtrend, again

BTC had a successful rebound last week and topped $44,500 in intra-day trading. It failed to successfully test its resistance at $46,000. As geopolitical tensions between Ukraine and Russia arose, BTC failed to hold support at key levels including at $40,000 and $38,000. It is currently holding at its $37,000 support level though it is likely that BTC will retest prior lows from January in the upcoming weeks.

BTC dominance is currently at 42% and is expected to go up as altcoins bleed against Bitcoin.

Major cryptocurrencies in the red

Among the top 20 cryptocurrencies by market cap, Terra (LUNA), with a 7% decline, is the only token that has not shed 15% or more this week. In the top 100 list, Anchor Protocol (ANC), a project associated with Terra, is the only cryptocurrency in the green this week.

Ethereum (ETH) is currently trading below $2,600 with a 17% weekly decline. After holding strong for most of the month, ETH structurally is now looking at $2,400 for support. Most top 20 cryptos including Cardano (ADA), Solana (SOL) and Polkadot (DOT) are now trading well below 50% of their highs from November.

What can an investor do in this downtrend?

It is likely that most investor portfolios have taken a hit in 2022. Large corrections happen frequently in a volatile market such as crypto. Investors can take heart from the fact that the market as a whole has always bounced back from such corrections to register newer highs.

Keeping emotions aside, this downtrend presents an opportunity to acquire some assets at low prices. The ideal way to do this is to have buy orders set at lower levels (20-30% down from today) in case the market goes into panic mode just like March 2020 (when Bitcoin dropped below $4,000). This approach can only work if an investor has cash to spare and is patient for the market to shake out fully. Also, investors are advised to only buy large caps (Bitcoin and Ethereum) given other altcoins are shedding a lot more compared to them.

Another approach is to take time off crypto and invest in risk off avenues such as bank deposits, gold or the US dollar. Once the market regains health, they can head back to investing in crypto. In the meanwhile, investors will do well if they remain patient and not be in a hurry to sell off their crypto assets when in the red.

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Disclaimer: This article was authored by Giottus Cryptocurrency Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.

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