What is the dip of this bitcoin cycle?
Of course, this article could be a collage of a photograph of Alexander Lukashenko and his quote, “We still don’t know where the dip is.” But then it would be a meme, not an article. So, we tried to figure this case out.
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Let’s start with two possible obscure words in the title – “Dip” and “Cycle”.
The “dip” is when the cryptocurrency doesn’t fall below a specific price level. That’s what the crypto community calls it. The dip for each coin can be different, and it can be anywhere. Also, the dip may not exist (in cases when the token issuers cannot continue their operations, for example, because of rug pull, hacker attack, or force majeure).
Another feature of the dip is that, as a rule, it can only be seen on the left side of the chart (namely, in the past). But to predict the dip, which has yet to happen in the future, is not only a difficult task but also bordering on an anathema: those who dare to do this are classified as charlatans very soon.
The universal method for determining the dip is the completion of the correction by the leading cryptocurrency – bitcoin. Experience shows that it is bitcoin that is the real locomotive for the entire crypto industry, although each project is trying to do its exploits to become market heroes. But, if bitcoin falls, the rest does not grow too much either.
Cycles. Not everything is so straightforward with them. There are two most popular ways to highlight bitcoin cycles. The first is the cycle between halvings (i.e., the period between the last and the next miners’ premium reductions). The second one is “bull runs” (i.e., periods of intensive growth of quotes, when bitcoin grows to new historical highs, simultaneously getting on the front pages of all newspapers, and not only cryptocurrency ones).
The halving model looks very logical. Halvings occur about once every four years, and there have been three of them in the history of bitcoin. At the same time, quite characteristic price structures with a similar frequency of highs and lows were observed each time. The current fall of bitcoin to the $18,000 zone closely resembles the similar falls in previous cycles before the formation of the dip.
Thus, if you look for the dip based on halving cycles, we can assume that the dip is very close. Many people will tell you that BTC price dependence on halvings is no longer as strong as it used to be, and now “it won’t work”.
If you try to proceed from bull runs, you can find some patterns here: each time, the price bottom was formed in the zone of a strong oversold market.
Oversold is a condition when the sellers’ reserves are largely depleted, and, in contrast to them, a proportional interest is formed on the part of buyers. Players who rely on price increases begin to consume all the offered supply volume and become the dominant force in the market. Price submits to this new balance of power and reverses. Hello, dip.
This time, oversold is not just serious, but a record one. According to some studies, the RSI oscillator indicators at such a low level were recorded only five times in the entire history of BTC!
As you can see, it may be concluded that the dip of bitcoin is already very close. But will this evidence play a cruel joke on buyers? Will the story repeat over and over again? Is bitcoin undervalued or overvalued?
There are many answers to these questions. And not everyone will be right.
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