Beware of the Bitcoin Bottom Fishing Trap in A Bear Market
Bitcoin (BTC) has dropped significantly from its all-time high of $20,000 back in late 2017. The price action of the past month has illustrated a volatility pattern with the directional south move has stopped briefly at $5500, $4500, $4000, and now $3500 to $3000.
Leading crypto analysts didn’t give much short-term optimism towards cryptocurrencies either. As of now, we are head into the final two trading weeks of 2018, however, most people have lost their interest in taking BTC home for the holidays.
Nevertheless, Bitcoin bulls still have their faith that one day, the crypto price would go up again. Some investors are trying to hunt for bottoms to jump in.
A Chinese Bitcoin analyst said on Weibo that one of his fans believes Bitcoin has nearly reached the bottom, it can only drop no more than 20 percent but it may go five times higher than the current price when the bull market comes.
Based on this expectation, that investor chose to go bottom fishing: uses all her money to ‘all-in’ Bitcoins.
Soon after, Jiang Zhuoer, founder of the major Chinese mining pool BTC.TOP commented that,
“It is very risky to go bottom fishing in a bear market. In 2019, automatic investment plan (AIP) will be a wise investment method. If you are afraid of missing the bottom and insist on buying BTC at this time, you should go for the prompt goods instead of leverage.”
Jiang reminds investors to stay away from investing in crypto futures or spot leverage. He also urges them do not borrow money or sell houses to buy any cryptocurrency cause they may easily get burned.
In the case of Bitcoin or other cryptocurrencies, both bottoms and tops are “after-the-fact” pieces of knowledge but nearly impossible to tell while it is taking place and even much less to be forecast when it will happen.
In early 2000 as the dot-com began to burst, some investors also chasing for the Internet stocks that had dropped 50-60%, but a few weeks later, those share become even more worthless.
The general advice is that trying to buy in the way up after a bottom has been found, which is much safer than go bottom fishing in a bear market.