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Amid recent downturns, crypto hedge fund expert Daniel Cheung predicts enduring “buy the dip” opportunities as traders adapt to volatility.
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Cheung emphasizes a significant shift in trader behavior, suggesting the current market conditions are ripe for short-term profit-taking.
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In his latest commentary, Cheung stated, “The reality is timing markets are extremely difficult,” stressing a longer-than-expected uptrend for cryptocurrencies.
Experts suggest the crypto market’s recent pullbacks could present lasting buying opportunities, as trading patterns evolve and volatility persists.
Traders are ‘constantly looking to take profits’ in the volatile market
According to Cheung, traders have adapted to the latest cycle by embracing a “short-term” mentality, which has led them to focus on quick profit-taking. This shift comes at a time when the total crypto market capitalization experienced a significant decrease, dropping 5.41% to $3.44 trillion within a 24-hour span, as reported by CoinMarketCap.
Recent data from crypto analysis firm Santiment pointed out major drops in several altcoins that had seen substantial gains over the preceding months. Among the top 100 cryptocurrencies, Kaia (KAIA) suffered the largest hit, falling 31.33%, followed closely by Stellar (XLM) down 28.31%, and Flare (FLR), declining 26.87%.
Interestingly, Santiment noted that if retail traders react impulsively due to fear, rapidly offloading their positions, this could paradoxically set the stage for a robust recovery in the market.
“Expect a swift rebound to assets like TRX, AVAX, DOT, ICP, POL, FIL, and TIA,” they remarked, hinting at an optimistic outlook despite the current turbulence.
Additionally, Swyftx lead analyst Pav Hundal elaborated on the market dynamics, explaining that the recent pullback might merely be a temporary “blip,” arising from a wave of traders engaging in leveraged positions that subsequently faltered.
“Traders were piling into leveraged longs before the smash. As soon as spot market liquidity melted away, they were in trouble,” Hundal noted, highlighting the precarious nature of the current trading environment.
Indeed, approximately $1.58 billion in long positions faced liquidation within the past day, according to CoinGlass, reflecting the market’s volatility.
It is ‘extremely difficult’ to time the crypto market accurately
Return to Cheung’s insights, he firmly states, “timing markets is extremely difficult.” His commentary suggests a departure from former cycles where investors primarily adopted a ‘hodl’ approach combined with a simple “buy the dip” strategy.
“The reality is timing markets are extremely difficult, and the fact that so many people believe they can call the ‘top’ on crypto now leads me to believe crypto is due for a much longer than expected uptrend this time,” he asserted, reinforcing the unpredictability of the current climate.
Market observers, including analysts from Bitfinex, have expressed similar sentiments, predicting that near-term price corrections for Bitcoin are unlikely to mirror last week’s dramatic 10% plunge. They attribute this to a significant reduction in selling pressure post Bitcoin’s recent return above six figures.
“With such a decline in realized profit and sell-side pressure, we can expect future declines to be less abrupt than the one experienced last week,” Bitfinex analysts concluded, projecting a more stable outlook moving forward.
Conclusion
The prevailing sentiment within the crypto community appears to endorse the notion that while present market fluctuations may induce short-term fear, they also invite enduring opportunities for strategic investors. Cheung’s predictions, coupled with the observations of market analysts, foster a cautious but optimistic outlook for cryptocurrency trading. As the landscape continues to evolve, participants armed with insights will be poised to navigate the intricate market dynamics ahead.
