Why Averaging Bitcoin Dollar Costs Could Be Your Best Bet in Today’s Market

Why Averaging Bitcoin Dollar Costs Could Be Your Best Bet in Today’s Market

  • Bitcoin has continuously fallen over the past two weeks, largely due to the FTX crash
  • Institutional investors like Purpose Bitcoin ETF Holdings have yet to redeem despite the discount.

The latest Bitcoin (BTC) crash has done more harm to investor sentiment than good. Those who have watched the market closely may have observed that investors are rather timid about buying back.

If you find yourself in the same boat, here are some considerations that might help you better understand the current situation.


Read Bitcoin (BTC) Price Prediction 2023-24


The price of Bitcoin has steadily fallen over the past two weeks, largely due to the FTX crash. Reports from an FTX hacker soon followed suit. BTC barely had enough time for a significant recovery, and its latest performance is a ghost of its highly volatile former self. Price isn’t the only thing that’s been affected.

Investor sentiment was also hit hard and dampened Bitcoin’s ability to recover. Investors are afraid to buy back only for the price to fall. Additionally, most buyers are staying away for fear of post-FTX risk. Institutional demand is a segment that has taken a hit.

Bitcoin ETF holdings

Source: Glassnode

Institutional investors like Purpose Bitcoin ETF Holdings have yet to redeem despite the discount. This is confirmation that investors are waiting to see if the market will recover.

The lack of meaningful demand is evident in the low execution of leveraged positions after the latest crash. This is seen in the estimated leverage ratio of Bitcoin futures, which has dropped significantly this week.

Estimated Bitcoin Futures Leverage Ratio

Why dollar cost averaging makes the most sense for Bitcoin

Many investors are still afraid to buy BTC, especially now. It affected his ability to rebound. However, this does not mean that the current market situation is a bad time to buy.

The market may gradually recover and those waiting for an opportunity to buy the bottom will have lost an opportunity. On the other hand, it could still go down further.

Market timing is quite difficult, especially in the current market conditions. The best strategy would therefore be to apply the average of the dollar cost after each trough.

Following whale tracks could also be a useful strategy. For example, BTC has seen some bear relief over the past couple of days. It is no coincidence that whales have accumulated over the same period, contributing to the latest increase.

Bitcoin addresses containing more than 1,000 BTC

Well, Bitcoin is heavily discounted from its current high, which means the current price level is ideal to enter the market. However, there is always additional downside risk, but then BTC has a history of unexpected rallies. A mid-dollar cost on every downside strategy is the best bet for long-term investors.

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