With the recent decline in Bitcoin from a peak of $64,899 down to $32,959 as of this writing (a 49% decrease), is this the beginning of the end of Bitcoin or a tremendous buying opportunity? I think it's a buying opportunity. Bitcoin has had drawdowns of this magnitude before in bull markets and it's fairly normal for this asset. Furthermore, we are not anywhere near the peak of this market cycle based on my research and past bull market behavior. While there will definitely be a sell-off after Bitcoin reaches its new cycle high (there are many estimates ranging from $100K to $500K), the bottom that is established after the "blow off top" should be significantly higher than where it is trading now, based on past history. New investors to the space, however, are certainly alarmed by this and will feel a strong urge to sell especially if using borrowed funds. I don't recommend using leverage at all in crypto, stocks or gold - only use cash you can afford to put away for a while. My own observation is that there seems to be a lot of leverage (futures) chasing Bitcoin on the way up and down in this market cycle, which seems to have increased the volatility. However, if your strategy is to simply buy the dips and hold onto it for the long term (even better to put it in a hardware wallet offline and "out of sight, out of mind"), you should be very happy. Despite all the ups and downs, Bitcoin has returned on average a 200% annual return for the past 10 years. Given Bitcoin's verifiable scarcity (21 million coins maximum), supply is immutably fixed forever. Demand will fluctuate with the market and adoption of it as an investment, store of value and potentially a medium of exchange. Over the long run, as adoption grows, the demand will follow and the price will inevitably rise. Any market will follow a life cycle and Bitcoin is no exception, as shown in the chart below:
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Buy the Bitcoin Dip?
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With the recent decline in Bitcoin from a peak of $64,899 down to $32,959 as of this writing (a 49% decrease), is this the beginning of the end of Bitcoin or a tremendous buying opportunity? I think it's a buying opportunity. Bitcoin has had drawdowns of this magnitude before in bull markets and it's fairly normal for this asset. Furthermore, we are not anywhere near the peak of this market cycle based on my research and past bull market behavior. While there will definitely be a sell-off after Bitcoin reaches its new cycle high (there are many estimates ranging from $100K to $500K), the bottom that is established after the "blow off top" should be significantly higher than where it is trading now, based on past history. New investors to the space, however, are certainly alarmed by this and will feel a strong urge to sell especially if using borrowed funds. I don't recommend using leverage at all in crypto, stocks or gold - only use cash you can afford to put away for a while. My own observation is that there seems to be a lot of leverage (futures) chasing Bitcoin on the way up and down in this market cycle, which seems to have increased the volatility. However, if your strategy is to simply buy the dips and hold onto it for the long term (even better to put it in a hardware wallet offline and "out of sight, out of mind"), you should be very happy. Despite all the ups and downs, Bitcoin has returned on average a 200% annual return for the past 10 years. Given Bitcoin's verifiable scarcity (21 million coins maximum), supply is immutably fixed forever. Demand will fluctuate with the market and adoption of it as an investment, store of value and potentially a medium of exchange. Over the long run, as adoption grows, the demand will follow and the price will inevitably rise. Any market will follow a life cycle and Bitcoin is no exception, as shown in the chart below: