Why a Dip to $40,000s is Essential in Bitcoin?

A crypto analyst proposes that Bitcoin enthusiasts should wait for the asset’s price to fall into the low $40,000 range before making their next investment. This strategy aims to secure the best possible entry point for the anticipated next bull run. 

Optimal Entry Point Expected in Low $40,000s 

According to Markus Thielen, head of Research at 10x Research, the ideal time to enter the Bitcoin market is when its price dips to the low $40,000s. In an August 7 report, Thielen outlined that this price level would set the stage for another major rally. Historical data shows that Bitcoin last traded in this range on February 6, 2024, when it was valued at $42,577. 

Current Bitcoin Price Trends 

As of the latest update, Bitcoin is trading at approximately $56,848. This marks a 12.89% decline from its value on July 31. Analysts suggest that Bitcoin could potentially fall to the $40,000s within the next few months, making it a more attractive entry point for future gains. 

Diverging Opinions on Bitcoin’s Short-Term Movement 

Other analysts share a similar outlook on Bitcoin’s price trajectory. Timothy Peterson, founder of Cane Island Alternative Advisors, highlighted in an August 5 X post that both $40,000 and $80,000 are plausible price targets within the next 60 days. Crypto Rover echoed this sentiment, suggesting that a drop to $40,000 could be imminent if Bitcoin breaks current support levels. David Gokhstein, founder of Gokhstein Media, also expressed interest in purchasing more Bitcoin if it falls to $50,000 or $40,000. 
 
Also read: Bitcoin Sees Massive Accumulation as Price Dips Below $50K 

Skepticism About Long-Term Holding Strategies 

While $60,000 had previously been a strong support level for Bitcoin, the asset has recently slipped below this threshold for consecutive days. Given the current volatility, Thielen advises against a buy-and-hold strategy. He notes that Bitcoin and Ethereum do not exhibit the same high risk-reward ratio seen in recent U.S. stock markets. 

Current Risk and Investment Strategies 

Thielen maintains that Bitcoin’s current price may still present a buying opportunity, but he recommends placing a stop loss at $54,000 due to ongoing risks. He emphasizes that the risk is still to the downside, especially in light of three consecutive days of outflows from Bitcoin exchange-traded funds (ETFs), which indicates that these funds are not capitalizing on the current dip. 

Impact of Spot Bitcoin ETFs 

Since the launch of U.S.-based spot Bitcoin ETFs on January 11, these funds have seen $17 billion in inflows. Despite this, Bitcoin’s price fell below $50,000 on August 5, approaching its January 11 launch price of $46,656. Thielen finds it surprising that Bitcoin has dropped so significantly despite the substantial investment in these ETFs. The average price of Bitcoin held by ETF investors is around $60,000, placing them "underwater" with the current price below this level. 

Investor Sentiment and Market Conditions 

Thielen’s analysis suggests that retail investors may be hesitant to engage in significant buy-the-dip activities due to the current downtrend in Bitcoin’s price. The absence of strong upward trends in Bitcoin and Ethereum might lead investors to seek other opportunities or adopt a more cautious approach. 

Strategic Considerations for Bitcoin Investors 

The current market conditions present a complex picture for Bitcoin investors. While a dip to the low $40,000s could offer an optimal entry point for the next bull run, analysts like Thielen caution that the asset’s current volatility and price trends warrant a strategic approach. Investors should consider historical data, current market trends, and individual risk tolerance when making investment decisions. The evolving situation with Bitcoin ETFs and overall market sentiment will likely continue to influence investment strategies and decisions in the coming months.