Trying to Catch Bitcoin’s ‘Absolute Bottom’ Is Wrong; Gradual Buying May Work Better
Summary
- Crypto Dan said trying to catch the absolute bottom in a Bitcoin bear market is the wrong approach.
- As the bear market continues, investors who bought at higher prices sell, lowering the average cost basis and shifting supply to investors with a long-term holding outlook.
- A gradual buying strategy is often favorable over the long run in this phase, and the window of opportunity lasts longer than many investors think.
Forecast Trend Report by Period
Trying to pinpoint Bitcoin’s exact bottom in a prolonged bear market is the wrong approach, and gradually building a position may offer better long-term results, according to a CryptoQuant analysis.
Crypto Dan, an analyst at CryptoQuant, made that argument in a QuickTake note published on Aug. 17.
As the downturn drags on, the average cost basis of Bitcoin holders starts to fall at a certain point, he wrote. That happens as investors who bought at higher prices sell at a loss, transferring coins to holders with a relatively stronger long-term bias.
In that phase, gradually accumulating Bitcoin is often advantageous over the long run, the analyst wrote.
The window of opportunity usually lasts longer than most investors expect. Paradoxically, however, that is also when most investors leave the market.
