Buying the dip mostly seems to be a good idea but consistent dip might lead you to an unknown and unwanted confusing situation
Starting from this year itself, the crypto market has been gradually facing ups and downs, but the past several weeks and ongoing situations are becoming a nightmare. Cryptocurrency prices and continuously cascading overall crypto market capitalization are enough for someone to get skepticism. Still there remains another perception that could see an opportunity even at tragic times.
The crypto market was already facing declines due to market sentiment rising after the Russia-Ukraine war, Fed interest rate hikes, anticipation of inflation, etc. Following this, the collapse of the Terra (LUNA) network turned out to be the worst hit in the market that created ripple effects all over the market. On top of that, recent reports of Fed Interest rate hike recorded more than what was being anticipated, has also brought fear in the market resulting in massive sell offs. All these factors led the market to a huge dip from where it’s not seeking any path to recover for now.
Alongwith the crypto market, the products provide you the services related to cryptocurrencies like Grayscale Bitcoin Trust, also facing decline. Currently the prominent investment vehicle of asset management firm Grayscale Investments, The Grayscale Bitcoin has seen a massive drop in its price and training at a discount of about 33.7%. This is the lowest recorded dip in GBTC price.
Plummeting of price clearly signifies the desperation of investors who are trying to get away from bitcoin exposure given the top cryptocurrency broke its vital support of $20,000 and trading at around 19,320 at the time of writing.
Prominent asset management fund, Grayscale had entered the market in 2021 with a huge amount of assets under management worth $20 billion. Experts believe that a major part of Grayscale’s achievement is due to the boom in bitcoin price. This followed significantly, making assets under management value of Grayscale Investments reaching $50 billion once. But as soon as the winds of cryptocurrencies slowed down, the AUM of asset management firms dropped to just $13.3 billion.
Falling of bitcoin price could be a reason for this massive turbulence all around the market indicating the carnage could stay here for long. Along with this, the bearing chaos could also continue to wash out the crypto market creating a ripple effect across the industry. That would end up other assets than bitcoin also as the reason for Grayscale trust products losses.
Source: https://www.thecoinrepublic.com/2022/06/18/grayscale-bitcoin-trust-trading-at-lowest-buying-opportunity-or-sign-of-distress/