When Bitcoin Takes a Tumble, the ‘Buy the Dip’ Choir Sings Louder 🎵

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What to know:

  • Bitcoin took a 2% nosedive at the start of the week, dragging the rest of the crypto market down by up to 5%. 📉
  • The crypto market has been as flat as a pancake since last week’s sell-off, thanks to U.S. tariffs and the looming fear of a recession. 🤔
  • Despite the current downward spiral, the ‘buy the dip’ mantra is still going strong, with some predicting a wild ride and potential gains in altcoins and memecoins. 🚀

Bitcoin (BTC) kicked off Monday with a 2% drop over the past 24 hours, according to CoinDesk Indices data, casting a shadow over the broader market as major tokens plummeted by as much as 5%. 🌩️

BTC touched a resistance point at $84,000 on Sunday, a key level to break for any hopes of a bullish run. As of Monday afternoon in Asia, it was trading just above $83,300. 📈

Majors like XRP, Solana (SOL), Cardano (ADA), and dogecoin (DOGE) took a beating, falling as much as 5%, while BNB Chain’s (BNB) managed to stand out with a 3% gain. 🎉

The crypto market has been stuck in neutral since last week’s sell-off, largely due to U.S. tariffs and deteriorating macroeconomic conditions. The specter of a U.S. recession looms large, thanks to Trump’s tariffs, with traders bracing for more market turbulence. 🌪️

However, some see the potential for volatility in altcoins and memecoins as a silver lining in this flat market. 🤞

“Trading volume has surged for altcoins after Trump’s World Liberty Financial bought MNT and AVAX, the latter of which was also part of an ETF application by VanEck,” Nick Ruck, director at LVRG Research, said in a Telegram message. “This might indicate that traders and investors will shift their focus to altcoins in the short term for better gains compared to large-cap coins like Bitcoin or Ethereum.”

Traders speculate that the current sell-off could be due to the unwinding of ETF and spot-linked trades. 🤷‍♂️

“The prevailing theory is that the current sell-off is entirely driven by the massive ‘multi-strat’ hedge fund strategies that have dominated the macro space,” Augustine Fan, Head of Insights at SignalPlus, told CoinDesk in a Telegram message.

Multi-strategy (multi-strat) trades involve hedge funds using a mix of tactics—like arbitrage, long-short positions, and leverage—to maximize returns across asset classes. 🤓

In the case of bitcoin, a popular multi-strat approach is the basis trade, where funds buy spot BTC (often via ETFs) and short BTC futures to profit from price discrepancies. This strategy locks in low-risk gains when the spread is favorable. 🤑

However, when profits from basis trades dwindle due to tighter spreads or market shifts, funds exit their positions, selling bitcoin and ETF shares en masse. This liquidation pressure likely amplified the sell-off, especially in the wake of tariff-related volatility. 🌋

Yet, the “buy-the-dip” mentality remains the battle cry of the bulls. 🦁

“Equity valuations outside of the major large caps are relatively contained compared to historical averages, and economic hard data is likely to outperform the rapid deterioration in soft data. So, the market consensus is that this remains a ‘buy the dip’ market while we navigate the tariff volatility,” Fan added. 📊

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2025-03-17 11:06