Bitcoin Price Retracement Analysis
Bitcoin price has retraced from 2019 year’s high of around $13,800 per BTC to around $6,700, at the time of writing. This is over 51% price correction. This price correction has become the cause of many speculations. People, either from their analysis or quoting others, are of the view that it would go further down to around $5000 per BTC.
The traders relying on their Technical Analytical tools are playing short (sell). The sentiments around Bitcoin is “Fear” which is apparent from scanning the Search Engine.
Should one be worried?
We tried to see back the trend in order to see if it helps us form an opinion. There were many instances when the BTC price retraced by 80%-90% and then continued towards forming new highs. Depending upon what the goal of the investor is, we found every retracement as an opportunity to invest more and profit from the retracement.
Bitcoin Price Retracement History
Looking at the history of Bitcoin trading, these retracements are normal. Bitcoin price has retraced to as low as over 90% before starting to move towards its high again. Let’s look at the events.
In June 2011, BTC price reached around $30 per BTC before retracing back to around $2 per BTC in November 2011. This accounted to over 90% retracement. Bitcoin was just in its 3rd year. The trading volume at those times were just a fraction of what it is these days. There was no trend for investors to look into. The bravest who kept holding did profit immensely.
After crashing by more than 90% BTC started recovering and reached to a little over $7 in first quarter of Jan 2012 but it again had to take a fall to around $4, frightening many investors in the innovative digital money. This was over 40% price correction.
The rise in popularity of Bitcoin brought new exchanges and traders in the market. The media coverage helped Bitcoin to reach triple digits for the first time. It saw a high of around $250. However, BTC then fell free and went down to around $40. This was over 80% price retracement.
November – December 2013
Bitcoin failing all predictions, spiked to around $1200 per BTC. It then shifted towards a long downtrend, seeing price corrections in short term. In January 2015 it reached a low of around $160 which is more than 85% retracement.
November – December 2017
2015, 2016 & most of 2017 was the period when people who purchased BTC (and sold at the right time) were able to hit the jackpot. In 2017 BTC reached five-figure for the first time and suddenly went up to $20,000 per BTC towards the end of 2017. After that it again went in to long downtrend giving hope of change in course, several times. However, it kept travelling the downtrend and traded in 3k’s for several months before bulls started to play again. Bitcoin had over 80% price correction.
Reading through the history, the current retracement of around 50% is not the one which would scare majority of the HODLers. If the trend is to continue, BTC would recover well in future months. The investors who don’t play the volatility but plan for long term, would be utilizing every opportunity they have to invest more and accumulate. This retracement would just be the cause for them to have good feelings.
Also considering the ‘Bitcoin Halving’ event in around the mid of 2020, the daily influx of BTC would reduce to half, giving more reasons for the price growth. Presently, around 1,800 BTC are introduced every day. After the halving event, this will reduce to around 900 BTC per day. This will be interesting because this BTC issuance will be below the inflation rate of most countries. Add to the fact that BTC has the limited supply, it will be exciting to see the economics playing its role.
It is a common phrase these days on social networks, “let’s collect some cheap BTC before the Christmas”. Do you agree?
Please note past performance is not the guarantee that future will be same. Be vigilant and do your due diligence. The author’s opinion should not be construed as financial advice.