I published an article approximately this time last year announcing that I felt it was likely that we had seen the top in Bitcoin’s price. As it turns out, this article was remarkably prescient. Now, this doesn’t mean that I’m a genius; it may well be that, on this occasion, I was just lucky. However, my article attempted to outline reasons for the top in Bitcoin’s price and why the run-up was less exuberant than seen previously. As it turns out, this is how things panned out. As a year has gone by and we have seen a significant fall in the Bitcoin price, I felt that now may be a good time to review the position and see what is likely to happen going forward.
Many of those who follow me and have read my book will be convinced about the future of Bitcoin and may have invested at some point in the last two years and will be keen to know what we can expect from the price going forwards. Has the price of Bitcoin decreased as far as it will go, or is there a further downside to come?
Having lived through a Bitcoin bear market, I know this stage in the Bitcoin price cycle is somewhat tricky.
Those convinced in the technology and invested heavily wait with bated breath to see whether the price will go up and live in trepidation at the price going any further down. Indeed as the price was stuck around $6000 in 2018, that is how I felt, and the price remained at this level for a markedly long time.
Those who strongly believe in the technology find it hard to believe that anyone would ever sell their Bitcoin, and as such, they are persuaded that they should hold onto it, and at some point, circumstances will turn a corner.
As it turned out in 2019, this is what happened.
After a capitulation from $6000 down to $3000, those who couldn’t believe their luck started scooping up as much Bitcoin as possible. As soon as the price reached $3,000, the momentum of the price rise gathered steam until it reached a peak of $12,000 just four months later. Those who were heavily invested breathed a massive sigh of relief, and the price stabilised below this level for approximately another year.
If we look at the price trajectory in 2015, unlike in 2019, the price data levelled out at a low level for a much more extended period. To such an extent, at that stage, people did believe that maybe Bitcoin had no future after having rallied to a price of $1300 and then rapidly crashing to a level of $200. It was the first time anyone had seen that kind of bear market play out, so people were less sure that, eventually, the price would take off again.
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