Why You Should Think About Investing In Bitcoin Again
With the United States stock market falling under some real pressure during last month, Bitcoin seems to hold support above the $6,000 mark and begs the question of whether now is the best time to invest in the leading cryptocurrency.
The Dow Jones Industrial Average was down over 8% from its previous all-time high during October but it is now down by 5%. This contrasts with Bitcoin which is holding steady at around $6,400 above major support of $6,000. This is a sign that investors are using the digital currencies as a hedge to their portfolios as equities continue to get hit amid a highlighted earnings season.
If we want to understand why we are holding the support and not capitulating to the $4,500 region then we need to look to the dominance the Bitcoin has via the market cap. If you look to the percentage of the total market cap chart on CoinMarketCap then you will see that Bitcoins dominance stands over 50%. Itâs nearly touching the 60% mark which would be its highest level since December last year when Bitcoin was trading at its all-time high of nearly $20,000.
Itâs worth noting that the correlation between Bitcoin dominance and altcoins. There are several popular altcoins which are down over 85% through the last month. This is possibly another factor to the climbing market cap dominance of Bitcoin with altcoins till selling off and many of them are below the ICO price. Perhaps, investors are deciding to just suck it and see and pray that the bear market will be over soon and that their beloved coins will hold on. Either way, there is a clear divergence between the market cap of Bitcoin and that of the altcoin market.
According to Forbes, there is an old saying on Wall Street which is âbuy low, sell highâ but nevertheless the question still remains whether this saying will apply to those who trade with crypto. If you take a look in the history books back to the height of the altcoin bull rally, many investors were piling in near peak prices. If traders found altcoins alluring now in October, at more than 85% discount in the majority of cases. Not only is there a divergence between altcoins and Bitcoins but there is also one between the price of digital assets and fundamentals.
What are your thoughts? Let us know what you think down below in the comments!