Bitcoin saw one of its most dramatic recent price swings yet on Friday, plunging as low as $10,400 per coin and prompting Coinbase to briefly disable trading.
While this price action may encourage some to pile in and purchase the cryptocurrency at what appears to be a discount (or “buy the dip”), one foreign exchange strategist has a clear-cut message: Don’t.
Boris Schlossberg, foreign exchange strategist at BK Asset Management, said the volatility could continue over the coming week and he wouldn’t step in here to buy. Here are his reasons.
• Bitcoin as a speculative product has captivated investors this year. The price swings over the last several trading days have proved particularly volatile.
• Further downside could impact investor sentiment and physical holdings as traders may liquidate their positions and positions in more traditional markets.
• Amid muted volatility in other capital markets, bitcoin could see volatility in the coming days.
• The $10,000 level appears to be the cryptocurrency’s floor, as it marked a breakout just three weeks ago and bitcoin hovered about the level today.
Bottom line: Buying bitcoin here would be like trying to catch a falling knife, according to Schlossberg.