Time to buy the dip

Bitcoin continues with the correction… or is it actually a start of the bear market? Since fundamentals remain as strong as ever, we believe that this is just a correction and an excellent opportunity to invest additional capital. We sent a short memo to our investors this Monday at 6am UTC. Here is an excerpt:

The market is in a correction mode, especially BTC (which we don’t hold for quite some time now). Many people expect BTC to go down to $40k or even $38k, and it is a likely scenario. However, when everyone expects something to happen, it rarely does. We expect very strong buying pressure at some point, and it will be a good time to add more capital. We have additional capital from our treasury ready to deploy if BTC goes to or below $40k. Should this actually happen, it will be a fantastic buying opportunity.

As Bitcoin dropped to $38k today, we invested additional capital from our treasury. Was this the actual bottom? Nobody knows, but we believe we are very near to it.

The market could go down several percentage points, but it is almost impossible to catch the exact bottom. Altcoins continue to outperform Bitcoin, and some of them are actually at or near their all-time high values.

Most important, while BTC is down 25% in May, our flagship Solidum Cautus Crypto Hedge Strategy is up 11%. In line with our mission, we continue to protect our clients’ (and our) capital from large drawdowns.

Market overview

During the first half of April, major crypto hit their all-time highs before correcting in the second half of the month. The market sell-off caused a record-breaking $10 billion futures positions to be liquidated on 17 April.

As is usually the case with significant corrections, a swift recovery followed, which stabilized Bitcoin above the $56,000 price level. Throughout the month, BTC’s dominance was gradually diminishing. It started the month at 56.74% and ended it at a 3-year low of 48.03%.

The shift of the market dominance indicates that market participants favor altcoins over Bitcoin in the current phase of the market cycle. The market netted a monthly gain of +12.71%

Chart 1 - Crypto market performance (2021-04)

The best three performers in the top 25 crypto assets by market cap were DOGE (+529%), XRP (+177%), and VET (+128%). ETH posted a mid-range return of +45% during April, while BTC ended the month amongst the worst performing assets with a loss of 2%.

Chart 2 - Top 25 assets by market cap performance (2021-04)

While performance-wise, Bitcoin’s current situation looks a bit grim, its adoption among institutional firms continues to flourish. Among other positive news, MicroStrategy acquired an additional 253 BTC on 5 April. Additionally, Coinbase stock started trading on 14 April, and Grayscale Investments added 1$ billion worth of crypto to their balance sheet on 22 April.

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DISCLAIMER: This article is for informational and discussion purposes only and does not constitute a marketing message, an investment survey, an investment recommendation, or investment advice. The article was prepared exclusively for a better understanding of market dynamics.