Guess most of you have seen the Tweet from the Bitcoin Official account warning about that 80% Dip. Is this 4 real, should I worry or is this just a nice bit of fearmongering?
I decided to have a look at the biggest Bitcoin Crashes so far, to see if doing my own research would give me some insights.
The Biggest Losers
June 2011: -94%
In April 2011 BTC was below $1, hard to imagine but try it. It hit $30 in June until the bottom fell out on June 19, when Mt. Gox got hacked.
- This Crash: went from $1 in April to $30 in June. A real 30X but then it went all the way down to $2 in November. Which is still a 2x from the start.
August 2012: -54%
In August 2012, the public learned about the first big BTC Ponzi scheme. These guys were promising an incredible 7% weekly interest, but if it sounds too good...it probably is and BTC crashed hard.
- This Crash: went from $5 in May to $13 in August and back down to $7.50 in Sep.
April 2013: -74%
In April 2013, it was again Mt. Gox. This time the exchange couldn’t handle the volume, crashed, got hacked again, and was forced to shut down.
- This Crash: went from $14 in Nov. to nearly $230 in April a beautiful 16X. And then back down to $60, which is still 4X from the start, in 7 months.
December 2013: -55%
When China banned Bitcoin at the end of 2013, it lost 50% of its value overnight, well we know by now what Chinese Fud does to the market.
- This Crash: went from $100 in Oct, to $1150 in Dec and then down to $520 in Dec and later on to $360 in May). That is 11 X back down to 5.2X in a 3-month period.
December 2017: -62%
2017 was an amazing year as Bitcoin ran up to $20,000. Then, on Dec. 27, it all came crashing as people realized that this pump would not last another year.
- This Crash: went from 3.2K in Sep 2017 to 19.5K in Dec 2017. That is a 6X and then back down to 7K in Feb, which is still 2X from the start 6 months earlier.
March 2020: -50%
The Covid Crash in March 2020 brought Bitcoin down from $10,000 in February to below $5.0000 in March.
- This Crash: Took BTC from 6.6K in Dec to 10K in Feb and back down to 5K in March. The up´s and downs in this crash are clearly lower than what we saw in the previous crashes. BTC did not even do a 2X to the top. What is also different is that this is the only 'Big' crash so far where BTC ended below the price where the pump started. This might be due to the global panic pandemic at this point in time.
May 2021: -53%
I remember this one very well first, Elon Musk came back on his promise to accept Bitcoin as a payment for Tesla cars due to the environmental impact (as if he did not know that before, I mean this guy ain´t stupid). And then the flood of China Fud made the market meltdown to 30K.
- This Crash: Took BTC from 20K in November, to $64,000 in April a 3X in 6 Months, and back down to 30K in May. This is still 1.5X from the Nov. starting point.
- May 2022: -59%
- The Fed Fud Financial dip of 2022 already started back in December 2021but as everything Fed related it took a bit more time than usual.
- This Crash: Took BTC from 30K in Jul 2021 to 68.000 in Nov 2021 is 2.2 X increase in 5 months. And then down to 35K in Jan 2022 which is still 0.1X up. Yes I know we are at 28K now, but that is for the next article as BTC went up significantly first after the January 2022 low.
Now let´s put that all in an overview:
The average crash takes 6 months from the bottom to the top and back down. The average dip measured from the top is 63% and the amount of X´s BTC does clearly reduce over time (which we are all already very much aware of).
Hence based on this view the 80% dip warning that the Bitcoin Official Twitter account posted looks a bit exaggerated. Being 59% down already, with a 63% average. Seeing the numbers very slowly reducing over time both the X´s up as the % down during a crash 59% might just be the bottom.
Because something that increases exponentially, decreases exponentially..... so if the increase is less exponentially so is the decrease.
We all know that what goes up fast comes down even faster (no not a reference to Luna). But there are always another million butterflies that can impact the effect.
Now I know that this sounds very positive from a baby that´s been screaming that we are going down to 21K for weeks.
Therefore I have to let you in on a little secret. If you do these types of research don´t stop here.
My 21K fear comes from the 4-cycle religion and for now, we only had a look at the worst crashes. Those take about 6 months from the bottom to the top, to the bottom, and back up.
Now tomorrow I will have a look at a somewhat longer time frame and at first glance that does not look as positive as today.
Hope you enjoyed my post, remember to check in tomorrow for part 2 and that hitting the like button is one of the few free things in life.