Bitcoin Market Condition Overview

Bitcoin's price has experienced a notable decline, raising concerns about the continuation of the recent bullish trend. After breaking key support levels, a defensive trading approach is now essential. Buying the dips is no longer an automatically recommended strategy, especially in the absence of strong confirmation of a bullish trend resumption.

Key Indicators to Watch

  • Realized Price: Represents the average purchase price of Bitcoin by market participants. Regaining price above this level is a positive sign.
  • Value Days Destroyed (VDD) Multiple: This ratio helps determine whether long-term Bitcoin holders are selling their holdings. A low reading suggests they are holding, potentially indicating a bottom is near.
  • 200-Week Moving Average: Historically, this average has acted as a strong support level.

Suggested Trading Strategies

  1. Exercise Patience: Instead of trying to call the bottom, wait for confirmation of regained key support levels.
  2. Small Allocations: If you're determined to buy, start with small allocations and increase them gradually as market conditions improve.
  3. Respect the Trend: Until the bullish trend is re-established, assume the market is in a corrective phase and adjust your strategies accordingly.

Conclusion

While Bitcoin's long-term fundamentals remain sound, the short-term market structure indicates weakness. By adopting a defensive trading approach and focusing on key indicators, traders can manage risk and protect capital during this period of uncertainty.


Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients. 

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