BTC and alts across the board have gotten hammered the past few days. We have seen a strong run up the past couple months in cryptos across the board. Bitcoin and other altcoins like BNB, Ethereum, and Litecoin are up over 100% since the turn of the year.
But lately, we have seen a big pullback in the crypto markets, with many coins down 10-20% (some more) in the past few days. However, a crypto dip of 10-20% is not uncommon in the crypto markets. So is this a dip you should buy up or not? How do you trade cryptos that are pulling back strongly?
Don’t Catch A Falling Knife
Bitcoin and the other altcoins mentioned above were all very overbought before the crash. This pullback is actually a good thing, as pullbacks like these are normal and healthy in the cryptocurrency world.
But you shouldn’t blindly buy dips, especially when this is only the first significant pullback we’ve had in the markets in the past 2 months since this run-up began. The market needs some time to pull back and consolidate a bit before we can head higher. It is safer to wait for some confirmation of support holding vs buying as soon as we get to support in these scenarios.
Cash is a Position
It’s important to remember that cash is a position as well during these market conditions. We are too overbought to buy dips without waiting for confirmation of support holding, but we’ve also had the major pullback that would’ve been a good shorting opportunity. There aren’t any obvious trades at the moment, which means there’s no edge for most traders.
We haven’t made any trades on our chatroom the past few days for this reason. We have been waiting for a trend to form. And despite the pullback, we are still bullish on the markets, as BTC and altcoins across the board are still in strong uptrends. Don’t let short term price action take your attention away from the bigger picture trend of the market.
Good Bounce Plays Coming Up
Pullbacks are good in the markets not just for the bigger picture trend. They also provide great day trading opportunities. If we can get another day of pulling back in BTC and ETH, we will be on watch for bounce plays in these names near support areas, likely near daily moving averages. Some other altcoins we have on bounce watch are LTC and XRP. If you’re in our chatroom, we’ll let you know as soon these suckers start to show some signs of life!
Bulls on Crypto Street is a trading education website dedicated to digital assets such as Bitcoin, Ethereum, DeFi, NFTs, and other new advancements in the Metaverse.