Bitcoin experienced a flash sale yesterday, resulting in a nasty-looking red candle and sending fair-weather bulls running for the hills, as $850 was wiped off its value in a matter of minutes. However, rather than howling about the sky falling in, it’s important in times like this to gain a little perspective and remember that Bitcoin has experienced far worse dips in the past and still come out smiling.
A Blip on the Radar
Bitcoin is famous for its volatility both on a macro and micro scale, but in a macro sense it follows the general trend of all assets in terms of price action within bull markets and bear markets.
Pullbacks like the one Bitcoin experienced yesterday have to be measured against the general market sentiment when it comes to judging their medium-long term impact. The fact is that, despite the selloff looking dramatic, it only represents a 7% pullback, which is peanuts compared to the stunts Bitcoin has pulled in the past:
The above charts clearly demonstrate that when Bitcoin is in the midst of a bull market, dips of up to 53% haven’t stopped the Bitcoin price making higher highs and, in the case of 2017, all time highs. Bear market dips, like the huge ones we saw in November 2018, are worth worrying about, but we are clearly in the beginnings of a bull market right now, so a 7% dip is small fry in context, and should not be causing anyone to scurry for the exits.
Golden Cross Similarities With 2019
For those needing a little extra encouragement, we can look at what happened the last time Bitcoin experienced a golden cross in May 2019:
Spot the similarity? After an initial dip, the May 2019 golden cross kicked off a month-long upward trend that led to the Bitcoin price hitting $14,000, well before a Bitcoin bull market was anywhere near being confirmed.
Zoom Out, Kick Back and Relax
Of course we’re not saying that history will absolutely repeat itself, but the fact that the Bitcoin price has hit all time highs despite being savaged by over 50% on the way up should act as a reminder that 7% dips in a bull market are nothing to worry about.
Dips and pullback are all part of a healthy market, and are to be expected after almost two months worth of solid uptrend. Just sit back, relax, and enjoy the view. And hey, if you’ve got a house or kids to sell, now would be a good time.