Bitcoin’s nearly 30% drop in price since peaking at more than R1.06 million in November has been greeted as a pre-Christmas opportunity to “buy the dip”.
Jon Ovadia, CEO of crypto exchange OVEX, says buying the dip has been a successful trading strategy for the better part of a decade.
“Investors and traders understand that cryptos are volatile, and they expect sharp price drops, which they have historically used to their advantage. Many traders wait for a 20% drop in the price of Bitcoin (BTC) as a signal to buy, and further increase their positions if the price drops 30% and even 40%. Bitcoin is now close to 30% below its peak in November, and we are starting to see some aggressive buying in the market.”
The same applies to Ethereum (ETH), Solana (SOL), Litecoin (LTE) and other cryptos ranked among the most traded in the market.
It’s interesting to note that two coins that have outperformed BTC over the last month are ETH and Binance Coin (BNB), both of which experienced drops of less than 20%.
For most of the other coins in the top 10 market cap rankings it has been a rout. Both Litecoin (LTC) and Cardano (ADA) are down about 50%.
Polkadot (DOT) has been on a tear since July 2021, rising from R160 to a high of R870 on local exchanges on news of technological enhancements that will allow competitors to raise crowd loans on the DOT network. The price has since dropped to around R420 on local exchanges.
Litecoin enjoyed a strong surge in price, with a five-fold increase in price between January and June ahead of a ‘halving’ in August – similar to Bitcoin, the rate at which Litecoin is mined is halved roughly every four years to reduce new supply to the market. LTE has been beset with numerous challenges, including weak transaction volumes and withering miner interest due to reduced profitability. The coin has dropped nearly 50% since reaching a minor peak in November.
Price drop since November 2021 peak
|Binance Coin (BNB)||– 18.5%|
|Bitcoin (BTC)||– 27%|
|Ethereum (ETH)||– 19.3%|
|Solana (SOL)||– 36%|
|Litecoin (LTC)||– 48%|
|Cardano (ADA)||– 44%|
|Polkadot (DOT)||– 51%|
|XRP (XRP)||– 34%|
“There is a sense in the market that this general drop in crypto prices is healthy for the market, and traders who sold out at the frothy prices we saw in November are now starting to buy again,” says Ovadia.
BNB and ETH have remained surprisingly resilient in the face of a sharp market selloff, and are expected to retest recent all-time highs in the coming weeks. ETH is the native coin of the Ethereum blockchain and is attracting widespread support for its ground-breaking work in unrolling smart contract functionality that allows users to transact outside the traditional financial system. The performance of BNB is driven by growing adoption by developers of the Binance Smart Chain, which promises similar functionality but at lower costs and greater speed.
While Ethereum is a decentralised network, meaning it resides on thousands of nodes or computers around the world to make hacking it impossible, Binance Smart Chain is largely controlled by Binance.
Earn interest on your crypto deposits
Ovadia says wealth managers and high-net-worth individuals are taking a keen interest in cryptos, not just for their potential capital growth, but because of the ability to earn above average interest rates.
“With interest rates of 9% and 10% on stablecoins – and higher on larger amounts deposited – this is one way to hedge against inflation and earn interest rates that are better than that typically available from the banks,” he says.
|Asset||Annualised interest rate||Minimum balance||Withdrawal notice period|
|Tether (USDT)||10%||1000.0 USDT||30 days|
|Binance USD (BUSD)||9%||1000.0 BUSD||30 days|
|TrueUSD (TUSD)||9%||100.0 TUSD||30 days|
|USD Coin (USDC)||9%||100.0 USDC||30 days|
|Ether (ETH)||5%||0.1 ETH||30 days|
|Binance Coin (BNB)||4%||1.0 BNB||30 days|
|Bitcoin (BTC)||4%||0.01 BTC||30 days|
More than 50 cryptos to choose from
OVEX has more than 50 cryptos that can be purchased on its RFQ (Request for Quote) page. The selection includes the larger cryptos such as Bitcoin, Ether and Solana as well as some smaller ones that have outpaced the broader market in the course of 2021.
Brought to you by OVEX.
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