Don’t Be Spooked By Bitcoin’s 15% Drop, Now Is The Perfect Time To Make Profits

But bitcoin may not recover as soon as people think, as bears are now taking advantage of what once was a panic-induced sell-off.

Bitcoin is approaching $40,000 for the second time in the past two days. It is very likely that bears are trying to drive the price down or investors are deciding to take profits for now. $40,000 is a very strong support for bitcoin. If bears manage to take over this level, the next support would be $38,000.

Meanwhile, two indicators suggest that bitcoin’s price is undervalued.

The MVRV ratio is an asset’s market capitalization divided by realized capitalization.The higher the number is, the more unrealized profit or loss is in the market, indicating that the asset is overbought. While a decreased number suggests the asset has entered an oversold level. The MVRV ratio for bitcoin is decreasing as people panic sell, which is actually healthy for the market in the medium term.

In addition, the crypto fear & greed index has plunged to a three-month low of 27 out of 100. This index is used by many investors to decide whether the dip is present, because many short-term investors like to “buy the fear, sell the greed.”

Analysts point out that bitcoin could be mimicking its moves during March 2020, when the crash of the stock market took bitcoin down to $3,000. Then bitcoin bounced back and reached its all-time high in the next few months.

Either way, investors are braced for more volatility.

How to make money from price swings?

Futures trading is one of the most popular tools to grow your wealth. You can benefit from price swings to earn money by speculating the direction of crypto’s price.

For instance, if you use 0.1 BTC and 100x leverage to short bitcoin at $40,000, when bitcoin drops to $35,000, you will earn ($40,000 – $35,000) * 10 BTC/$35,000 = 1.42 BTC.

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