The cryptocurrency market is in a recovery following a massive dump initiated on May 13 after Tesla’s CEO, Elon Musk announced that the electric car company would suspend its accepting BTC as a form of payment while citing concerns related to the energy required to mine cryptocurrencies.
Following the recovery, Bitcoin and the majority of Altcoins were seen trading in the green as of press time; selected tokens such as Polygon (MATIC,+31.41%), Dogecoin (DOGE,+47.18%), iExec RLC (RLC,+45.20%), ERGO (ERG, +84.92%), Ethereum Classic (ETC, +26.28%), Arweave (AR,+ 20.15%), Sushiswap (+26.63%), rose to fresh highs, notching double-digit gains.
Dogecoin rallied when Elon Musk hinted at improving the Network’s Transaction Efficiency, stating that Tesla and its CEO were “working with Doge” developers. Coinbase also announced it would be listing DOGE in six to eight weeks. Dog-themed token, Dogelon Mars (ELON) rallied 36.22% in the last 24 hours and 192.57% weekly.
Matic rose to fresh all-time highs of $1.51 on May 14 amid fresh updates and the launch of Niftykitapp which allows minting of low-cost and eco-friendly NFTs. Ethereum regained the $4,000 level while Bitcoin returned to trade above $50,000.
At the time of writing, Bitcoin traded at $49,974 while Ethereum was at $4,018.
The Crypto Fear & Greed Index is indicating that trader sentiment is on the verge of “extreme fear”, an index last seen after the March 2020 market carnage. Bitcoin (BTC) and Altcoin traders are more fearful than any time in over a year as a sentiment gauge signals “fear” and uncertainty are driving the market.
That said, it is important to state something salient. Market corrections are normal in a bull market. But what should you do during market declines?
When markets do fall, don’t sell in a panic. Instead, consider buying the dip. Market corrections often provide great opportunities for investors. The trick is to have a direction and strategy. While sticking with a long-term investment strategy, emotions like fear and greed shouldn’t be allowed to change one’s course of action.
Cryptocurrency trader, RektCapital aptly stated ”Extreme Fear precedes financial opportunity”
Regarding what’s next for Bitcoin price and Ethereum, the sentiment remains mixed as traders remain unsure. The possibilities of a dead cat bounce exist. A dead cat bounce is a temporary, short-lived recovery of asset prices from a prolonged decline or a bear market that is followed by the continuation of the downtrend.
On the contrary, Rafael Schultze-Kraft of Glassnode noted that funding rates had reverted to their position from before the market correction, also Stablecoin balances across exchanges resume their uptrend, providing huge potential liquidity should a bullish phase reenter the crypto markets.
Chad Steinglass noted that Bitcoin trading in an extended consolidation range may be indicative of its new role as a store of value and he hypothesized that traders who have BTC in their investment holdings may be “selling BTC and especially GBTC to raise cash liquidity as they reduce their overall leverage.”
Regarding Ethereum, Steinglass stated that “ETH is in a new regime of price discovery making it hard to know what a “good new fair value for ETH will be.” he also stated that Ethereum could easily have more room to run, though any hiccups in the upgrades could derail things quickly.
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