The price of bitcoin has had a challenging year so far in 2022. After reaching an all-time high of close to $70,000 in 2021, the price has since plummeted to a level of approximately $20,000. This indicates that it has decreased from its all-time high by a percentage greater than 68%. So, should you buy the dip in the price of BTC?

Why has the price of BTC dropped?

The price of bitcoin has experienced a precipitous decline over the past few months for a variety of different reasons. First, the decreasing fiscal and monetary conditions in the United States led to the downfall of the Bitcoin market. The United States government, in contrast to its actions in 2020 and 2021, has not announced any big fiscal stimulus plans. In 2021, the government of the nation gave fiscal stimulus in the form of trillions of dollars, some of which were paid out in Bitcoin.

Second, the actions taken by the Federal Reserve caused a precipitous drop in the price of bitcoin. This year, the Federal Reserve adopted a very hawkish stance, which was a sharp contrast to its previous policy of maintaining exceptionally low interest rates. This year, it has increased interest rates by 225 basis points and begun the process of lowering the size of its balance sheet.

The majority of the time, a period of high interest rates is accompanied by poor performance for hazardous assets. As a matter of fact, a bear market has been established in all three of the most important stock markets in the United States: the Dow Jones, the Nasdaq 100, and the SP 500. Other prominent assets, such as gold and silver, have also experienced a downward trend recently.

In the meantime, it would appear that current demand for Bitcoin has significantly decreased. To start, data obtained directly from the chain indicate that there has been a gradual decrease in the amount of activity taking place across the network. In addition, findings from businesses such as Block and Coinbase demonstrated that the number of people trading Bitcoin has been on a downward trend.

The question now is, should you purchase the dip in Bitcoin? Using a strategy known as dollar-cost averaging is one way, in my opinion, that one may get started buying during this dip in the market. One possible explanation is that the coin is developing a pattern known as a double bottom. In addition, there are indications that inflation is beginning to ease, which will result in the Federal Reserve beginning to tone down its rate hikes in the coming months.

Where can I currently get Bitcoin?

eToro

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