- Bitcoin finally ended its incredible run with a 17% correction this week
- Newcomers to the space might be worried that the bull market is over
- Bitcoin dips of up to 40% ar not uncommon in a bear market, and occur to shake you out
Bitcoin experienced the correction that everyone had expected this week, dropping 17% from its high of $19,490. The sight of a swiftly moving red candle clearly spooked newcomers to the market who sold their holdings (and got liquidated), helping to drop the price to $16,320. Suddenly the bears are out in full force, with some predicting the end of the bull market. However, as history has shown us time and time again, when Bitcoin is in a bull market, double digit crashes are part and parcel of the game and the best course is usually just to hold it out.
30-40% Corrections Are Common in a Bitcoin Bull Run
It’s a natural response to feel panic when Bitcoin is dropping and sell your holding, but history has proved that, 99% of the time, this is the wrong action to take. The best traders will have sold at the start of the move downwards, or even more likely towards the top of the high that led to the drop, leaving inexperienced traders to sell when the damage has been done.
The 2015-2017 bull run is a perfect example of why, for many out there, simply holding through dips is the best method. The 2015-17 bull run saw multiple double digit corrections along the way, with seven being 30% or above:
As we can see, Bitcoin even experienced a four-day 30% correction in November 2017 and still had enough to not just overturn this drop in the same timeframe but also put on a 72% increase within a month, taking it to all time highs. This move is indicative of what Bitcoin can do in a bull run, which is very much where we are now.
During 2015-17, each and every dip was bought up all the way up to $20,000, including some savage ones in the latter stages. Now compare this to what we witnessed this week – a 16% dip after an incredible 89% seven-week move. We have only just entered a new market cycle and there is every reason to believe that this loss will be wiped out in due course.
Only Sell if You Know Where to Buy
Now of course there could be more downside to come, especially after such an extended run, but wherever Bitcoin ends up before reversing, we can be very confident that we are in the right place for it to make up those losses, and more, given that we are so early into the Bitcoin bull market.
If in doubt about how to play a drop like this, apply the golden rule – only sell if you know where to buy.
