All cryptocurrencies experience volatility and are subject to market fluctuations, yet recently Bitcoin’s value has taken an unprecedented plummet. Be it bearish or within a bubble, the description hardly makes a difference, yet experts continue to debate. What can be lamented on is the fact that within this year alone, it soared to never before seen highs – only to then drop with such gravity.
Let’s explore the reasons behind such trends, shall we? Do check how bitcoin can help with poverty alleviation for further info.
Is Bitcoin becoming bearish?
Well, good question! However, it’s not that simple. You see, with market variation, drops are undoubtedly inevitable. Nevertheless, the main concern is how steep the drop is. When this is to the tune of 20% or more, financial experts usually label this as becoming a bear market. This applies to Bitcoin as it fell between the 8th of January 2021.
Let’s not forget that last year at the start of September, it dropped from $12 to 10K within a week. As if that wasn’t shocking enough, on November 24th, 2020, it fell from approximately $19,200 to $16,700 (by $2.5K) in just 2 days – yes merely TWO days!
Now it becomes interesting as 3 days later, it amassed an all-time high and has surpassed $35K since. Wow is an understatement but hopefully, it’s now evident why Bitcoin has been awarded the coveted title of being bearish – so to speak.
Bitcoin in popular culture
Veteran Bitcoin cynic Peter Schiff confidently predicted that Bitcoin won’t exceed or hit highs in late 2020 (and rather be surpassed by gold). The irony – as it ended up breaking all records in December 2020 itself. The 2018 bubble phenomenon does question Bitcoin’s long-term sustainability, in terms of its value. Its high ROI does tip the scales for even the most experienced experts who now don’t know what to believe anymore.
Can we really blame them though? Bitcoin’s ever-evolving infrastructural processes are what will drive its value and the protective mechanisms that accompany it. These include the deflationary protocol and the Proof-of-Work revisions.
Bitcoin’s value trends
Let’s compare this to the largest global economy – the US stock market. This exhibits what is known as a ‘megaphone pattern’, creating the S&P 500 chart pattern. Referring to this we can see that when uninitiated, it has a minimum of 2 greater highs and 2 lesser lows.
This usually occurs when markets are quite volatile, instilling uncertainty in traders’ minds. Market direction determines whenever stocks retract and then stabilize, yet asset bull cycles can occur with capital flow changes. Now let’s compare this with Bitcoin…
Bitcoin as a crypto hero(ine)
Let’s explore Bitcoin lengthening cycle theory, typically consisting of:
Accumulation → Bull Market → Blow-off top → Major Correction → Bear Market.
With each price top and its subsequent correction, the duration for the next bull market always extends. Bitcoin observes a bull run immediately post each halving. Still, as this theory suggests, Bitcoin continued to accumulate last year even after the lengthening process. Hence, as the bull market succeeds, it’s not really a bearish market. We can’t consider it to be so, anyway.
With DeFi finance under its belt and deployed by several platforms, it’s no wonder that Bitcoin has already seen so much success in value. This trend is only set to continue with increased accessibility, improved security, and efficient practices to reduce gas processing fees.
It’s literally a matter of time before we witness its dominance in virtually every fathomable financial market. So cool, right?
So there you have it. Is Bitcoin becoming bearish? Not exactly – but rather varies into the realms of it. Will this redefine the bear market as such? Well, hasn’t it already? No one really saw huge dips and rises occurring with any asset in the same financial year – and Bitcoin did just that.
Bitcoin’s quirky nature has taken the world economy by storm and these waters are only going to emerge as crashing waves in the not-so-distant future. Watch this space!
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