Cryptocurrency Trading Strategy in a Market Downturn: Buy the Dip or Stay Cautious?
After cryptocurrencies reached new highs recently, the market is now facing a clear downturn.
Signals to focus on before making any decision:
1. Trading Volume
If the drop is accompanied by weak trading volumes, it's likely a healthy correction, not a crash.
But if volumes are very high in selling → that's a warning that the downward trend might continue.
2. Technical Levels
• Always monitor strong support areas.
• If the price holds them, it might be a “Buy the Dip” opportunity.
• If it breaks them, it's best to wait for a retest to avoid entering a larger downward wave.
3. Market Indicators (RSI – MACD):
• If the RSI drops below 30 = the market is in an oversold zone, a rebound might occur.
• The MACD shows you whether the trend has actually started to change or if it's just a minor correction.
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Smart Strategies for Dealing with a Market Downturn:
• Dollar-Cost Averaging (DCA): Don't enter with a large amount all at once; spread your entry over phases.
• Capital Management: Be specific with a small risk percentage on each trade (2-5%).
• Stop Loss. The most important thing is to have an exit plan before entering.
• Cash Liquidity: Keep a portion of cash to take advantage of any unexpected opportunities.
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