Bitcoin has had quite a week. It all began with a few tweets that Elon Must wrote and this all led up to a perfect scenario for market chaos. This was then followed up by FUD from China and heavy rumors of market manipulation. The price went from the mid $50,000's, all the way to just under $30,000. This was the largest price drop in the history of bitcoin in terms of dollar value. And this left many new people to bitcoin shocked, scared, and resulted in them selling their newly bought bitcoin. Falling into the old trap of buying high and selling low. Surely with this kind of insane price drop, there is no possible way that the bull run can continue, right? From here on out it; the bear market has begun, lasting until the next bitcoin having?
That magical bull-run that we all dreamed about will still happen. If it doesn't happen this year, it will go up sometime in the near future. This game is all about having a low-time preference. It's great and can be really exciting to check the price of bitcoin each and every day. Most of us probably check the price more often than we would like to admit. But, if the price of bitcoin going down depresses you to a point that you panic sell; that is when you need to consider if you are even in the right market. Do you possess the correct mindset for investing into this risky asset?
For a lot of new people to bitcoin and cryptocurrency, this was their first encounter with a "real" price dip. It was scary, and they couldn't handle it. But, something that you need to realize is that this type of price movement has happened time after time throughout bitcoin's history.Even during bull runs.
I will admit that I was just as disappointed as everyone when the price dropped. Of course I would like the price of bitcoin to instantly go up to over 400k, then retire to a tropical island and call it a day. I still feel 100% confident that this day will eventually come, just not today, tomorrow or even next week.
But now let me tell you why this "devastating" price dip actually has me bullish for what the future of bitcoin will hold in my opinion.
People want bitcoin to go to an unprecedented price level and for that to even be possible bitcoin has to be very volatile. In the past bitcoin going up or down $1,000 in a single day would have been a big movement. Today, that wouldn't be much of a movement at all. But going up tens of thousands in a candle is how we will reach those very lofty price goals. And just this week we had our first ten thousand price candle and it actually happened twice. First, there was a drop of $10,000, and there was an increase of $10,000. Unfortunately this time around the price dropped more than it gained, but there is still a lot that can be taken from this price action.
We all want the price of bitcoin to reach "moon level" prices, and therefore we need bitcoin to be volatile. But we can't always expect for that volatility to go in our favor. Several times it won't. Many times in fact. But I believe that is what makes a healthy market. We have to accept both the downward and upward volatility. For the last few months bitcoin has been in price discovery mode, and the market hasn't decided how much bitcoin should be valued yet.
The key thing to remember is that after that large dip to under $30,000, we did see the price go back over $40,000 within an hour. That could have been a time where bitcoin could have kept dropping to scary levels. Low levels that would resulted in the end of the bull run. But it recovered. For me at least; this signaled that bitcoin is strong, and that this bull run isn't over, that this was just a small bump in the road to shake out weak hands.
The strongest quality of bitcoin is the users that make up the network. Many people are not fans of toxic bitcoin maximalists, but it is those bitcoin maxi's that held during the market chaos and bought the dip. It is those strong minded investors that prevented this drop from being worse than it could have been. While they do have a lot of things they could do or say better. They do have unshakable conviction in bitcoin that helps protect it better than most other assets out there.
As for me. Like I said up above; I think this bull run is just starting to heat up. This type of shake out happens during every bull run and there was no reason to think it wouldn't happen this time as well. I have been taking advantage of this great buying opportunity and actually wouldn't mind if the price sticks around here for a while. This is when the money is made. I do think the price will slowly recover and that within a month or two we will be back to talking about new all-time high prices for bitcoin. Remember to invest responsibly and avoid using leverage!
What do you think? Is the bull run over? Have you been buying or selling your bitcoin?!
As always, thank you for reading!