Bitcoin (BTC) Drops Below $19,000 in Wider Slump. Should You Buy?

Bitcoin leads the broader cryptocurrency market lower by 4.5%, pushing the entire sector below the $1 trillion market capitalization threshold.

On Wednesday, the premier crypto asset -- Bitcoin (BTC) -- was priced as low as $18,644 per coin across cryptocurrency exchanges, representing a decline of more than 6% over the past 24 hours, according to CoinMarketCap.com. The entire cryptocurrency sector has been experiencing a severe downturn dubbed the "crypto winter," as asset prices, trading volumes, and digital portfolio values have fallen fast and far for most of 2022.

However, during the past 24 hours, the drop in Bitcoin's price has dragged down the entire asset class by nearly 5%, setting the total market capitalization for the category below the psychological threshold of $1 trillion down to $949.20 billion. Ironically, during the crypto market peak last November, Bitcoin itself had surpassed a $1 trillion valuation.

Bitcoin whales seem poised to sell large volumes of BTC

Bitcoin's latest drop in price may have been caused by a significant influx of BTC from the digital wallets of investors with large amounts of the digital asset -- known as Bitcoin whales -- to crypto exchanges. According to media reports, the CEO of crypto analytics website Cryptoquant noticed that as many as 15,000 Bitcoin have recently moved from private wallets to public trading platforms.

That surge suggests that Bitcoin whales, who bought at much lower prices, may be looking to sell and take profits at the current price range. If that happens, that volume amount would push the price of Bitcoin even lower. So it's very likely that the price movement over the past day could be the result of an early exodus of BTC holders who don't want to wait around to see what happens.

Is Bitcoin a buy?

However, for anyone not currently invested in Bitcoin, waiting around to see what happens is the best course of action in the short term to see if the price dips even lower. Bitcoin is already priced at 72% from its all-time high of $68,789 per coin (set on Nov. 10, 2021). According to the Bitcoin Rainbow Chart posted on BlockchainCenter, BTC is currently priced at historically low "fire sale" levels right now.

Every investor needs to understand their own risk tolerance, how much they're willing to lose, and any asset in which they plan to place a financial stake. Bitcoin has been a proven crypto performer, delivering triple-digit returns on an annualized basis for the last decade. While taking a wait-and-see approach makes sense during the current downturn, crypto-curious investors should know that prices for premium digital assets such as Bitcoin won't stay this low forever.