With Bitcoin trading above $ 56,000, retail traders may think they missed the opportunity to buy below $ 50,000 when the price was low compared to the massive price spikes that the coin royale attracted this market round. A valuation of $ 1 trillion increased institutional inflows into Bitcoin and top altcoins. At this point, as open interest and trade volume continue to peak for Bitcoin futures in derivatives trading, there is concern that a price correction below $ 50,000 could cause a series. liquidations and have a negative long-term impact on the price.
The Bitcoin Race
The current Bitcoin bull run is different from previous ones in many ways. But that does not guarantee that there will be no correction. It also does not guarantee that the combined market cap of Bitcoin and altcoins combined will not decline. Institutional buying continues at various prices during the current price rally. This would lead to negative returns on the portfolios of institutional investors.
When the price first crossed $ 50,000, it was noted that the stocks of institutions that have invested liquidity from their balance sheets in Bitcoin are highly correlated. Yields also increased in proportion to the rise in Bitcoin prices. A fall below $ 50,000 can negate this progression unless it is momentary. It is, however, essential to think about a point where it would no longer be profitable to buy Bitcoin if you calculate profits in USD. Currently, Bitcoin’s ROI / Risk or Sharpe Ratio is 3.12.
A value above three is considered excellent, and Bitcoin’s risk-adjusted returns are profitable for HODLers and investors. How long it stays profitable depends on the trend of the price rally, upcoming trend reversals and the buy price. Institutions like Grayscale bought Bitcoin on a planned basis by averaging the price over time, which is ideal so far with the current state of Bitcoin’s price increase.
These metrics also indicate that a dip below $ 50,000 is far from near unless a major trigger event reverses the trend. Several retail traders have also lined up on exchanges to buy Bitcoin above $ 50,000, this becomes evident from the volume of Bitcoin trading on spot exchanges. As the volume of trading on the spot exchanges continues to climb even at the current price level, it is likely that $ 50,000 may become essential support for Bitcoin in the future, just as $ 35,000 did during the previous phase of the current price increase.
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