Crypto Markets Nose Dive After CPI Announcement, But Now Could Be A Good Time To Buy The Dip

The past few days have been quite hectic for the digital asset industry. Bitcoin, the largest cryptocurrency by market capitalization, rose from $18,715 on September 7 to $22,645 last night (September 13). However, since then, BTC has retraced its steps, stumbling towards the $20,300 range at the time of writing. Most other cryptocurrencies in the top 10 and beyond have followed suit, flashing red for the past 24 hours.

The drop comes after the US Bureau of Labor Statistics reported that inflation was higher than expected in August 2022. Economists in the country had expected inflation to fall by 0.1%. This continues the downward trend seen in July when inflation fell to 8.5% from its multi-decade high of 9.1% in June.

However, according to the Bureau’s report, the consumer price index (CPI) actually rose 0.1% (month-on-month), with headline inflation coming in at 8.3% from 8.1 % expected.

In response to soaring inflation, the crypto industry plummeted along with global financial markets. Bitcoin plunged over 11% in less than 12 hours. The second-largest cryptocurrency by market cap, Ethereum, also fell 10% from $1,743 to $1,543 around the same time.

The global crypto industry market capitalization also fell by around 9%, from $1.07 trillion last night to around $977 billion this morning, according to data from CoinMarketCap.

Is it a good time to buy the dip?

While the price drop is bound to cause pain and disappointment for the cryptoverse, it also allows you to enter the market at lower prices. This is a practice known as dip buying, a strategy most experts swear by.

Lower prices also create an opportunity for existing investors to buy more coins at lower prices, reducing their cost of acquisition. The principle here is simple: buy low and sell high.

Moreover, there is evidence that the current bear market may end soon and prices may rise again. If this happens, those buying the dip will see huge profits when the bulls take over.

“It has been 310 days since the peak of the #BTC bull market at $65,000. This means that this bear market is about to end. Historically, $BTC bear markets tend to find their absolute bottom around 365 days after the previous bull market peak,” tweeted Rekt Capital, a renowned crypto trader and analyst.

However, what is also apparent from his tweet is that BTC prices could drop further before starting to rally. This is a notion that several other experts also support. “Current pivot is 21k. A clean break below here, and 19k is next. Break 19k, and it goes to main target 14k-16k for latest low,” tweeted Crypto Capo, another prominent crypto analyst.

However, that hasn’t stopped seasoned investors from buying BTC at current prices. “Despite the recent turbulence, I believe the trajectory of bitcoin and other major cryptos is on the rise,” said Nigel Green, CEO of Devere Group, a financial advisory and asset management firm. “Like many serious crypto investors, I buy the dip. I embrace this short-term volatility for longer-term gains,” he added.

As far as Ethereum is concerned, prices could see a significant rise in the coming days. Indeed, the Ethereum merger is fast approaching and is expected to go live between September 13-15. The merger is being touted as one of the most important events in the cryptosphere, and it should lead ETH to rally if all goes well.

Several analysts and traders support this notion, including crypto news outlet, Coinpedia, which predicts that ETH will hit $7,500 by the end of the year.

Therefore, buying ETH at current prices could bring massive gains if these predictions come true. This could be one of the reasons why Ethereum whales have been buying more and more ETH since the start of the year. “They anticipate positive price action around the merger,” according to a report from Nansen. In short, these whales are buying the drop in ETH in hopes of a rally after The Merge.

Conclusion

Falling prices can cause short-term problems. However, crypto markets are cyclical in nature. This means that a rally usually follows a crash and a bear run usually gives way to a bull market. Therefore, buying tokens when prices are low and holding them until the market recovers is a promising strategy.

At the same time, it is essential to note that crypto markets are highly volatile and speculative; no one knows when the bull market will come, how long it will last, and how far prices will rise. This is why it is crucial to do your own research and invest only as much as you are comfortable losing entirely.