Friday, February 23, 2024
Dividend Stocks

Bitcoin Hangover: The Perfect Time for Investors to Dive In

Source: shutterstock.com/Maestro-0111

Pardon the pun, but I’m going to “coin” a Bitcoin (BTC-USD) phrase right now. Since the “buy the rumor” and “sell the news” phases have already passed, it’s time for what I would call “buy the hangover.” In other words, my BTC-USD stock forecast calls for significantly higher prices now that the market is fearful about Bitcoin again.

Of course, the “buy the rumor” phase occurred when traders started hinting that the Securities and Exchange Commission (SEC) was getting ready to approve one or more spot Bitcoin exchange-traded funds (ETFs). We’re beyond that phase now, but we’re also past the “sell the news” phase with Bitcoin. What comes next is a terrific opportunity, as long as you can handle the volatility that comes with it.

Spot Bitcoin ETFs Are Here. Now, What?

It’s funny, how the buildup to an anticipated event is usually more exciting than the event itself. That was certainly the case with the expected SEC approval of spot Bitcoin ETFs. As the excitement built up, Bitcoin surged to approximately $48,000.

Recently, financial giants like BlackRock (NYSE:BLK) and Fidelity have entered into the spot Bitcoin ETF fray. These firms’ spot Bitcoin ETFs have already accumulated billions of dollars in assets under management (AUM).

All of this should enhance the sense of legitimacy surrounding Bitcoin among traditional financial firms. In other words, Bitcoin has “arrived” in 2024.

Yet, Bitcoin has declined to less than $43,000 after the SEC’s approval of spot Bitcoin ETFs. That’s the “sell the news” phase, but I propose that this isn’t the final phase of this sequence. Next up is a prevailing sense of fear and doubt, which is exactly what contrarian investors should look for.

Reasons to Worry About Bitcoin – and Reasons Not To

If you’re looking for reasons to worry about Bitcoin, you can find them if you dig deep enough. For example, you could point to New York Community Bancorp’s (NYSE:NYCB) horrendous financial results and share-price plunge. Then, you could lose sleep over the prospect of regional-bank failure contagion in 2024.

Or, you can stay calm and recall that the regional-bank failures of March and April 2023 were quickly contained. Thus, it’s unlikely that the events befalling New York Community Bancorp will pose a problem for Bitcoin.

Also, you could wring your hands because Federal Reserve Chairman Jerome Powell hinted that a March-meeting interest-rate cut isn’t likely. This could affect the Bitcoin price if there’s a slowdown in the U.S. economy.

Sure, you can panic-sell your Bitcoin for these reasons. Alternatively, you can look back at history and see that each and every fear-fueled Bitcoin-price drawdown was a terrific long-term buying opportunity.

Instead of finding excuses to worry about Bitcoin, you can add to your position when the price goes down. The point is that you have to make volatility your friend if you plan to buy and hold Bitcoin.

Thus, you can stay calm and take a big-picture view like Zodia Markets CEO Usman Ahmad has done. Usman assured, “In the medium to longer-term, we will see a stabilization and long-term positive tailwinds for Bitcoin price action and volume activity going forward.”

BTC-USD Stock Forecast: After the Hangover Comes the Rally

If we’re in the hangover phase with Bitcoin, then you can join the worry warts or embrace the volatility. My BTC-USD stock forecast indicates that the price will fluctuate, no doubt, but fear-driven Bitcoin drawdowns are only temporary.

Most importantly, understand that the “buy the hangover” phase is exactly the right time to get into Bitcoin. When the bears are searching far and wide for excuses to sell Bitcoin, that’s nothing but a bright green buy signal.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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