Recent crypto market downturn has sparked a debate on trading strategies, with industry analysts suggesting that the dip may offer prolonged buying opportunities. Daniel Cheung, co-founder of Syncracy Capital, believes the market is set for a longer-than-expected “buy the dip” phase, as traders increasingly adopt short-term profit-taking approaches.
Traders Shift to Short-Term Strategies
Cheung highlighted a significant shift in market behavior, where traders are “constantly looking to take profits” rather than holding long-term positions. This shift has coincided with a 5.41% drop in the total crypto market capitalization, which now stands at $3.44 trillion, according to CoinMarketCap.
The pullback has been particularly harsh on altcoins. Data from Santiment shows that tokens like Kaia (KAIA), Stellar (XLM), and Flare (FLR) suffered 24-hour losses of 31.3%, 28.3%, and 26.9%, respectively. Santiment analysts predict a swift recovery for assets such as TRX, AVAX, and DOT, provided retail traders don’t succumb to panic selling.
Adding to the turmoil, leveraged long positions faced significant liquidations. Swyftx lead analyst Pav Hundal described the situation as a “market extinction event” for longs, with CoinGlass data reporting $1.58 billion in long positions liquidated over the past day.
Longer Crypto Market Uptrend Ahead?
Despite the volatility, Cheung remains optimistic about the market’s broader trajectory. He noted that timing crypto market peaks is notoriously challenging, and the prevalent belief that traders can pinpoint the “top” suggests a longer uptrend may be unfolding.
“In prior cycles, the mentality was to hodl and buy the dip,” Cheung said. “Now, with so many trying to time the market, it seems likely that crypto’s uptrend will outlast expectations.”
Bitfinex analysts echoed this sentiment, suggesting that Bitcoin’s future price dips might be less dramatic. Following Bitcoin’s first spike above $100,000 and last week’s 10% plunge, selling pressure has significantly eased, creating a more stable environment.
“With the decline in realized profit-taking, we can expect future declines to be less abrupt,” Bitfinex analysts stated.
While volatility remains a defining feature of the crypto market, experts like Cheung and Hundal argue that the current pullback represents more of a blip than a full-scale correction.
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