Bitcoin - Is it Time to Panic?
At the low yesterday, the price of Bitcoin was down a little over 27% from the all-time high in March. In previous bull market cycles, we have seen many corrections of 30% or more. As was the case in past cycle corrections, we are seeing a lot of panic selling. Another issue is being in over leveraged positions and getting stopped out during corrections.
Unfortunately, many inexperienced market participants are not familiar with Bitcoin's past price history. So, when we experience a large correction, they panic and sell when history has shown that these corrections are great buying opportunities. But, unfortunately, past history has shown us that many people will be too scared to buy during this correction and many won't start buying again until the price of BTC is back up near it's all-time high.
If you take the time to study Bitcoin's price history, it is very clear that Bitcoin has been running in 4-year market cycles. This is especially true for the last two market cycles. From bear market bottom to the next bear market bottom, the 2015 to 2018 market cycle was 1432 days in length, and the length of the 2018 to 2022 market cycle was 1438 days. Even the elapsed times between events (bottom to halving, halving to peak, and peak to bottom) during each of these cycles are very consistent.
Obviously, this market cycle trend doesn't have to continue, but I believe that it will, at least for this cycle. If that is the case, then I wouldn't expect the post halving bull market to begin until October or November of this year. Looking back at the previous two cycles, the 2016 bull market started 259 days after the halving, and the 2020 bull market started 149 days after the halving.
There is always a chance that I am totally wrong and the peak in March was the peak for this market cycle and it will be all downhill from here. But I believe the probability of that is very low. I believe we could see a lot more volatility and possibly even lower prices leading up to the post halving bull market.
The German and the US governments still hold significant amounts of BTC which they could sell adding to downside pressure. There is also the Mt Gox BTC that could add to selling pressure driving the price of BTC lower. But in the coming months I believe any excess selling of BTC will be absorbed by the market and eventually the current bearish sentiment will flip to Bullish.
I will be using this correction and the time between now and this fall to increase my position sizes. But this is just how I am approaching this market cycle; every investor needs to do their own research and make their own decisions. I also make my decisions based on my long-term view and long-time horizon.
Unfortunately, many inexperienced market participants are not familiar with Bitcoin's past price history. So, when we experience a large correction, they panic and sell when history has shown that these corrections are great buying opportunities. But, unfortunately, past history has shown us that many people will be too scared to buy during this correction and many won't start buying again until the price of BTC is back up near it's all-time high.
If you take the time to study Bitcoin's price history, it is very clear that Bitcoin has been running in 4-year market cycles. This is especially true for the last two market cycles. From bear market bottom to the next bear market bottom, the 2015 to 2018 market cycle was 1432 days in length, and the length of the 2018 to 2022 market cycle was 1438 days. Even the elapsed times between events (bottom to halving, halving to peak, and peak to bottom) during each of these cycles are very consistent.
Obviously, this market cycle trend doesn't have to continue, but I believe that it will, at least for this cycle. If that is the case, then I wouldn't expect the post halving bull market to begin until October or November of this year. Looking back at the previous two cycles, the 2016 bull market started 259 days after the halving, and the 2020 bull market started 149 days after the halving.
There is always a chance that I am totally wrong and the peak in March was the peak for this market cycle and it will be all downhill from here. But I believe the probability of that is very low. I believe we could see a lot more volatility and possibly even lower prices leading up to the post halving bull market.
The German and the US governments still hold significant amounts of BTC which they could sell adding to downside pressure. There is also the Mt Gox BTC that could add to selling pressure driving the price of BTC lower. But in the coming months I believe any excess selling of BTC will be absorbed by the market and eventually the current bearish sentiment will flip to Bullish.
I will be using this correction and the time between now and this fall to increase my position sizes. But this is just how I am approaching this market cycle; every investor needs to do their own research and make their own decisions. I also make my decisions based on my long-term view and long-time horizon.
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