Bitcoin price performance in 2022 has been tough. After reaching an all-time high of around $70,000 in 2021, the price has dropped to around $20,000. This means that it is down more than 68% from its all-time high. So, should you buy BTC Dips?
Why did BTC fall?
There are several reasons for the steep drop in the price of bitcoin over the past few months. First, bitcoin crashed due to a falling financial currency in the United States. Unlike in 2020 and 2021, the US government has not announced any major fiscal stimulus policies. In 2021, the country provided trillions of dollars in fiscal stimulus, some of which ended up in bitcoin.
Second, the action of the Federal Reserve caused the price of BTC to crash. After keeping interest rates extremely low for years, the Fed took an extremely aggressive tone this year. It has hiked interest rates by 225 basis points this year and started shrinking its balance sheet.
In most periods, riskier assets tend to perform poorly in periods of high interest rates. Indeed, three top US indices such as the Dow Jones, Nasdaq 100 and S&P 500 have gone into a bear market as stocks declined. Similarly, other popular assets like gold and silver have also pulled back.
Meanwhile, it seems that the demand for bitcoin has declined sharply recently. For one, on-chain data shows that the level of activity in the network is falling. Furthermore, results from companies such as Block and Coinbase show that the number of bitcoin traders is falling.
So, should you buy bitcoin dips? In my view, I believe anyone can start buying this dip using the dollar-cost averaging technique. For one, it looks like the coin is forming a double-bottom pattern. In addition, there are signs that inflation is easing, causing the Fed to begin slowing its growth in the coming months.
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bitcoin price prediction
The four-hour chart is showing that BTC/USD price is forming a double-top pattern with a floor of 17,708. In price action analysis, this pattern is usually a bullish signal. At the same time, the accumulation and distribution indicator has moved slightly upwards.
Hence, the coin is likely to rise as long as the bulls are able to stay above the key support level of $17,708. However, as I wrote on Friday, a break below this support will see the coin drop below $13,000.