Great balls of fire… that is exactly what those who can hodl during this time will have. There is no denying that the week-long savage dump of Bitcoin is really testing all those weak hands. Today we take a look at what caused this massive dump and do our best to lift your spirits by answering the question: Is Bitcoin dying or not?
What is going on? Why is Bitcoin dumping?
All hell broke out when Bitcoin started dumping from $6 300 to $4 200 the past week. This is a decline of about 75% from its all-time high of $19 000 last December. One of the reasons for this fall could be due to the Bitcoin Cash hard fork. The fork took place on 14 November and ever since the Bitcoin price has been falling. Then there is also a large amount of infighting within the crypto community regarding the Bitcoin Cash hard fork.
Another possible reason for the dump could be due to market manipulation. It is being said that institutions may be driving the price of Bitcoin down so that they can buy it on the cheap and enjoy the ride when it goes up again. If one takes into consideration that Bakkt is due to be released in January 2019 and the SEC will be making its decision about a Bitcoin ETF, this does not sound too farfetched.
So, is Bitcoin dying or not?
Some analysts are saying Bitcoin is not dead and the price will go up again. One such is Tom Lee of Fundstrat. Lee says global markets are seeing liquidity dry up. So once Bitcoin is adopted more widely by institutions, the price will go up again. He called this time an awkward transition. eToro’s Mati Greenspan was quoted saying the market is recovering or drawing back from its rise in 2017. He said this is a temporary phase since the market is balancing itself for better things. This is merely a retracement and not the end of crypto assets.
The dump has also not stopped analysts from predicting the future price of Bitcoin. Adam Back from Blockstream remains adamant that Bitcoin will cost $250 000 – $500 000 in the years ahead.
This is the smallest Bitcoin correction to date
This is not the first time Bitcoin has dumped so drastically. Over the past nine years, there have been four major corrections. Looking back at 2011, 2013 and 2015, Bitcoin dropped with 82.6%, 94,3% and 85.3% on average. Putting that into perspective, for Bitcoin to drop with 85% from its all-time high, we would be seeing $2 950 instead of the current $4 000 support level. In retrospect, Bitcoin’s average correction is 85%.
When will the next bull run be?
It is very difficult to say or speculate at this stage. Whilst Bitcoin is holding strong at the $4 000 support line, anything is possible. Cryptos are extremely volatile and unpredictable. There is hope that with the release of Bakkt and the SEC’s ETF approval, there may be a bull run in the first quarter of 2019. BUT, this is not set in stone. It can change at any stage. The best thing to do is to hodl. It is interesting to note that there are some alt coins that are turning profits whilst Ripple, for example, is holding very strong against the Bitcoin price crash. All is definitely not lost.
Some crypto hodlers are trying to find similarities between now and this time last year. One person posted on social media saying the price of Bitcoin dumped this time last year before it went to the moon. Could history repeat itself? Well, let’s wait and see.
In conclusion, the Hugh Hefner of cryptocurrencies, John McAfee took to Twitter this week and told people to calm down. He called this stage normal and said people should stop freaking out. Well, if even McAfee is still hodling, maybe we can too.
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*Please note this article is not investment advice.