Bitcoin can still drop to $20K but holding remains winning strategy, data shows. The recent price rally of Bitcoin has caused a lot of excitement in the cryptocurrency community. Unfortunately, a few early adopters will not be celebrating. Many of the people who bought Bitcoin several years ago, when it was still worth just a few dollars per coin, find themselves sitting on large sums of cryptocurrency they can no longer afford to lose. So, what should they do now?
While Bitcoin has recovered to the point that it is now trading at $19,845, this is still a far cry from its all-time high of $20,000, which occurred during the early morning of December 17, 2017. The new trading range has been established between $19,765 and $20,911, and the potential for the downward trend to continue remains. Investors would do well to remember that Bitcoin has only traded above $10,000 for a little over a month, and that there is a very real chance that it could drop back to $20,000, or even below $10,000.
Anyone who has been paying attention to the crypto market over the past two years knows that it can be a volatile space. The price of a single bitcoin rose from $1K in January 2017 to a high of $20K in December 2017 then dropped to a low of $6K in February 2018. At the time of writing, bitcoin price is hovering around the $8K mark with analysts speculating that the market is headed toward $10K.Unloading positions in bitcoin (BTC) when it begins to decline after reaching historical highs is a poor investment decision, at least according to historical price behavior. The leading cryptocurrency has gone through many bullish and bearish cycles in its eleven-year existence. The BTC/USD exchange rate generally grows parabolically. Later, those profits are reduced by more than half as profitable traders sell at the top. But at the same time, traders who buy bitcoin near their local peak experience longer periods of loss.
Do you have bitcoin? Opportunity to make a profit
Nevertheless, the overall historical trajectory of the bitcoin price is still bullish. The cryptocurrency bottoms out after each bullish cycle and rises again, heading for new all-time highs. On the chart in the weekly time frame, the price hits consecutive highs separated by years – $500 in November 2015, $768 in June 2016, $2,998 in June 2017, $19,891 in December 2017, $41,986 in January 2021 and $64,899 in April 2021. Bitcoins up and down cycles over the past few years. Source: TradingView PlanB, the mastermind behind the widely used stock-to-flow model that predicts a bitcoin price of $288,000 by 2024, mentioned the cryptocurrency’s ability to return profits to patient investors in his tweet Friday morning. The pseudo-analyst noted that no investor who has owned bitcoin for more than four years has ever suffered a loss. He referred to the 200-week moving average curve as an invisible price floor that keeps the bitcoin market afloat during bearish corrections. The price of BTC/USD tested the indicated wave of support during its downward movement, but then recovered new highs. The red-orange transposition in the chart above shows the bullish depletion of bitcoin after the 2020-2021 price boom. Source: PlanB The statement came at a time when the price of bitcoin was showing signs of slowing down in its rise. BTC/USD reached $65,000 in mid-April and corrected to $30,000 almost a month later on Coinbase. From 28. In May, bets on the pair among traders totaled about $37,000. Yes, when you buy bitcoins, you buy them to hold for a long time or forever. This is how the game is played. Today’s sellers are April’s buyers, that’s unusual, they’re weak hands. – PlanB (@100trillionUSD) May 28, 2021 Meanwhile, PlanB’s long-term plans make bitcoin look like an asset that will continue to extract capital from traditional markets. Earlier, the analyst wrote that he expected people to buy the cryptocurrency because of its scarcity – there may only be 21 million BTC in the world. Silver, gold, countries with [negative] interest rates (Europe, Japan, soon to be the US), countries with predatory governments (Venezuela, China, Iran, Turkey, etc.), billionaires and millionaires hedging against quantitative easing (QE), and institutional investors discovering the best performing asset of the last decade.), billionaires and millionaires hedging against quantitative easing (QE), and institutional investors discovering the best-performing asset of the past decade will drive people to seek safety in bitcoin, PlanB writes in its 2019 paper Modelling the Scarcity Value of Bitcoin, while predicting a trillion-dollar market value for the cryptocurrency. Bitcoin continues to follow the price action of the stock-to-flow model. Source: ByBt.com, PlanB The model encourages investors who buy bitcoins at a price of about $65,000 to keep the assets even if it takes more than four years to recoup their investment. This is only true if bitcoin continues to follow the trajectory of the stock flow price model. The stock flow model is typically used to measure the scarcity of commodities, but can also be applied to #Bitcoin to obtain useful information about the supply of $BTC. Read more here: https://t.co/xZHtx86y0R pic.twitter.com/wF3c1JEB6H – Grayscale (@Grayscale) September 2, 2020 A log curve chart based on the same bullish pattern predicts a decline in BTC/USD to $20,000 or less. The downward price target appears after the Fibonacci curve is drawn between the upper and lower bands of the curve. The highest difference is about $111,590 and the lowest about $17,150. Theoscillator and bitcoin’s price curve are showing signs of a bearish reversal. Source: Bybt.com. The historical importance of the log curve in predicting price bottoms and stops makes it relevant enough for investors to realize their potential targets for long and short positions.
Despite its accuracy, the stock-flow model and its derivatives have been criticized for being unrealistically optimistic for loss-making assets. Charlie Morris, co-founder and CIO of cryptocurrency data company ByteTree, told CoinTelegraph in November that bitcoin’s falling supply does not guarantee that prices will rise when demand increases. People will still be able to sell bitcoins from the existing active supply to meet market demand, Morris said. Nico Cordeiro, chief investment officer and fund manager at Strix Leviathan, also criticized the main claim of scarcity-based bitcoin pricing models, noting that there is no evidence that supply dictates the market valuation of monetary products (gold, silver or bitcoin) in U.S. dollars. Past performance is no guarantee of future results. But with bitcoin gaining popularity in institutional circles, amid falling yields on safe investments (government bonds, the US dollar, etc.), it seems worthwhile for many to hold onto the token for now. Happiness is smiling on HODL. – Dan Hedle (@danheld) May 28, 2021 Denial: The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. There are risks associated with all investments and ventures and you should do your own research before making a decision.(Sellers are selling and buyers are buying) Bitcoin can still drop to $20K but holding remains winning strategy, data shows (Who are these people who are buying?) There is an apparent disagreement between the market price of bitcoin and its value as measured by the number of transactions. The former has been on a steady downtrend for the past year, while the latter has been on a steady uptrend, a phenomenon that has been attributed to an increasing number of users – and thus an increasing number of transactions – on the bitcoin network.. Read more about will bitcoin break $20,000 and let us know what you think.
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