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Recovery of the crypto market: Bitcoin, Ethereum, Dogecoin gain more than 6%

What happened

As of 9:45 a.m. ET, Bitcoin (BTC 1.87% ), ether (ETH 1.22% ), and Dogecoin (DOGE 28.46% ) up 6.6%, 9.2% and 8%, respectively, in the last 24 hours.

These rather oversized movements reflect an increasingly optimistic risk appetite for today’s digital assets. The total crypto market was up 8% to $ 2.4 trillion by 9:45 a.m. ET, mainly driven by movements in these three mega-cap cryptocurrencies.

Image source: Getty Images.

so what

Given the volatility of the crypto market, today’s price actions need to be seen in context. That rally comes after a few days of heavy sales, with a weekend crypto crash that saw Bitcoin hit a low of $ 42,875 and Ethereum hit a one-month low of $ 3,525.

This shouldn’t take away from today’s rally, where Bitcoin broke the $ 51,000 mark and Ethereum is heading for $ 4,400 per token. However, sentiment in the crypto market has not been favorable for investors who have got used to strongly bullish market conditions over the past year.

In fact, market sentiment is an important driver of the price development of important cryptocurrencies such as Bitcoin, Ethereum and Dogecoin. During the flash crash this weekend, the general sentiment in the crypto market sank into the “oversold” area. As an important indicator of investor sentiment, “extreme fear” has been identified for important crypto currencies such as Bitcoin in recent days. Investors and traders tend to view this extreme market sentiment as a good time to buy.

What now

That makes sense. We all want to buy cheap and sell high. However, buying assets that are under tremendous downward pressure is not easy.

We all like to think that we can buy when there is blood on the streets. However, given the volatility of the crypto market, it is understandable that some investors would simply want to take a step back and wait for the momentum to pick up again. Today the positive dynamic has returned.

Bitcoin, Ethereum, and Dogecoin remain three of the most watched cryptocurrencies in the market. That probably won’t change. Accordingly, these tokens are widely viewed as a measure of how various smaller alt-coins will perform in the near future.

Those who consider cryptocurrencies to be a multi-year investment for longer may have rightly viewed this extreme volatility as a buying opportunity. So far, a buy-the-dip approach has proven its worth for these important tokens. That can certainly change; however, investors today seem to be doing just that.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – including one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

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