As the dust settles over Bitcoin today, one BitWise Executive believes that despite the BTC USD crash this week, BTC represents a huge buy opportunity at the current Bitcoin price.
Bitcoin, Ethereum, Solana, and meme coins have been decimated. It has been nothing short of three days of bloodbath.
It appears sellers are unforgiving and want to regain everything they gave up from October 2023 to March 2024, when most coins peaked.
By the close of the August 5 bar, Bitcoin had crashed by over -30%. Losses were far more pronounced in less liquid altcoins, including Solana.
JUST IN: Over $3.8 trillion has now been wiped from the stock and crypto markets within the last week.
This crash is now ranked the largest destruction of wealth in history. pic.twitter.com/dJqCqtzB4v
— Jacob King (@JacobKinge) August 5, 2024
As fear grips the market, however, some see the current drop as a grand opportunity to capitalize.
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Matt Hougan, the CIO of Bitwise, one of the multiple issuers of spot Bitcoin ETFs, thinks that if history guides, traders should seize this opportunity to double down and re-assess their “bearish” positions.
Taking to X, Hougan said sharp price corrections that happen over the weekend when liquidity is relatively low often present good entries for discerning investors.
Indeed, over the weekend, crypto prices dropped harder, causing several bourses and brokers to halt trading certain securities.
Meanwhile, Bitcoin and DeFi protocols continued operating as expected, giving some weak hands the opportunity to exit.
Even as the crypto and financial markets come under immense selling pressure, Hougan thinks what’s happening now has happened before, on March 12, 2020.
Then, after the ravages of COVID-19 permeated Europe and then into the United States, that day, the world got a chance to grasp the full impact of the virus.
With the then-president announcing a lockdown, the Dow Jones fell by a whopping 2,353 points while tech stocks like Tesla, Google, and Intel crashed even harder, marking the worst trading day since the Black Swan of 1987.
On that day, Bitcoin slumped by nearly 50%, dropping to as low as $5,000–reversing gains posted in roughly one year.
Seeing the sharp losses, mainstream media publicly declared that Bitcoin has failed to be a store of value asset.
However, for those who ignored the news, buying BTC at that level was the best decision in their investment life.
Bitcoin went out to recover strongly, smashing 2017 highs and more than tripling to $70,000 by the end of 2021.
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Nothing has changed as far as Bitcoin’s fundamentals are concerned.
Bitcoin’s supply is capped at 21 million. It is decentralized and free from the whims of central banks or companies.
Those who bought BTC and held preserved their purchasing power amid soaring inflation.
Hougan is now convinced what happened between 2020 and 2021 is being replicated.
The current sell-off was sparked by macro events, mainly the turmoil in Japan and the escalation in the Middle East.
Combined with the news of Jump Capital, a major market maker reportedly exiting and therefore dumping coins, BTC and crypto prices fell harder due to low liquidity.
Interestingly, those losses are being impressively absorbed, considering price action at the end of August 5.
(BTCUSDT)
Bitcoin is trading above $50,000, with the bar closing with a long lower wick pointing to demand.
Beyond BlackRock scooping BTC as prices crashed, the United States Federal Reserve will likely slash rates by 50 basis points in September.
As central banks loosen, Bitcoin and crypto prices stand to benefit immensely.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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