Bitcoin (BTC) has been experiencing heightened volatility recently, following the confirmation of pro-crypto Donald Trump as the President-elect of the United States after the November 5 elections. This surge in volatility is expected to persist in the upcoming days, as both the Federal Reserve and the Bank of England are set to announce revisions to their benchmark interest rates on Thursday, November 7. The crypto market, however, remains optimistic, with the fear of a near-term correction considerably lower than it was last month.
The crypto community has witnessed a significant increase in FOMO (Fear of Missing Out) traders, particularly in the wake of the short squeeze initiated by Trump’s victory over Kamala Harris. This influx could potentially drive Bitcoin prices higher in the coming weeks, creating new opportunities and challenges for investors.
Top Reasons Why Crypto Investors Should Proceed With Caution
New investors often hold onto Bitcoin during bear markets, enduring periods of financial loss. Typically, after about two years, these assets change hands as market conditions improve and investor sentiment eases. According to Ki Young Ju, the founder and CEO of Cryptoquant, this is exactly the situation unfolding now.
Ki Young Ju, through a recent tweet, highlighted that Bitcoin investors who bought during the 2022 bear market are now gearing up to take profits in the months ahead. This scenario suggests that now may not be the optimal time for new investors to go all-in on Bitcoin. Instead, a more cautious approach, focusing on gradual selling rather than aggressive buying, is advised.
The diminishing returns scenario is another factor to consider, as it may prevent Bitcoin prices from replicating the extraordinary bullish breakout seen late last year, which resulted in gains exceeding 368 percent. Moreover, Bitcoin’s dominance in the crypto market has reached a critical milestone, surpassing 60 percent, which serves as a significant psychological resistance level.
Additionally, the weekly Relative Strength Index (RSI) for Bitcoin dominance remains at oversold levels. This signals a potential reversal in the near term, which could create space for altcoins to flourish. Leading altcoins such as Ethereum (ETH), Solana (SOL), and Dogecoin (DOGE) are poised to take advantage of this shift, potentially thriving in the coming months as Bitcoin’s dominance wanes.
