When Bitcoin peaked at nearly $20,000 in December 2017, it was expected that it would come down, but only marginally. Sadly, what followed was equivalent to the global economic crisis of 2008 for the crypto industry. In a matter of months, Bitcoin was bleeding below $3,500 in January 2019 after a six-months long losing spree. Between February to August of last year, Bitcoin witnessed a mini-rally when it crossed $12,000 for a few days; however, since then, it cooled down a bit and remained stagnant between $9,000–$10,000.
During this dramatic rise, fall, and rise of Bitcoin was termed by the industry pundits as the most volatile period, and many of them claimed that the worst days for the crypto industry are over. Unfortunately, such claims to be falling flat on their noses for the past couple of weeks. From moving between $9,000–$10,000 last month, Bitcoin has seen a sharp fall in March, and on March 13, it saw a crash of more than 50%.
Bitcoin is now sulking below $5,300 at the time of writing this article, and signs of recovery are quite slim. And once again, all the “million-dollar” predictions have faded away, leaving the investors with their hearts in their mouths, the only redemption being that all other financial markets are crashing too, which wasn’t the case in the horrendous 2018 crash.
However, is the current crypto crash worse than 2018? It’s a question that might be bothering most crypto investors, enthusiasts, companies, and the entire crypto industry at large. Let’s make a quick comparison:
The scale of losses
At the beginning of the FY2018-2019, BTC was priced at $9,250, which was $10,000+ down from December 2017, and at the end of the year, Bitcoin was down to $4,100. This means that between January 2018 to March 2019, five quarters to be precise, Bitcoin lost almost 80% of its value, which caused tremors across the industry. The market has still not recovered completely from the shock and continue to display volatility.
In comparison, the current downfall doesn’t seem as bad, at least on paper. At the beginning of the FY2019-2020, Bitcoin was priced at $5,320 and that’s almost equal to what it is today, at the end of the year. However, during this period, BTC peaked at $13,930 in June, and therefore, the actual downfall within the last nine months has been more than 61%, which isn’t encouraging at all.
This has made aspiring crypto investors confused, whether it is the right time to invest in the crypto market or not. There are various trading tools and platforms like bitcoineranew.com, which can give you a 99% success rate.
Financial market scenarios at respective periods
In January 2018, the mainstream finance industries, like stock markets, gold, oil, etc., saw a steady, and in some cases, significant growth. On the other hand, BTC fell from $19,870 in December 2017, to $10,265 in January 2018.
For instance, the BSE gained about 2% in January 2018 from the preceding month, while gold remained stagnant. Crude oil grew from $64.37 per barrel in December 2017, to $69.08 the next month. This is a fair indicator that Bitcoin wasn’t a correlated market back then, and hence, despite its poor performance, other markets are very mostly unaffected.
However, the current scenario is different. Global stock markets are crashing, oil prices have dropped significantly, and March 13 was equally bad for global financial markets. What this indicates is that Bitcoin, no matter what the crypto promoters say, has become apparently correlated.
What are the influencers saying?
There’s one more interesting factor that is common between crypto and convention markets, yet it is quite different and unique in both sectors, and that’s market influencers. We can understand it by understanding the following example.
Investment king Warren Buffett kept criticizing Bitcoin even when it was recovering last year and even compared it to the button of his suit in terms of utility. The entire crypto community came down scratching, and some even said that we shouldn’t take tech advice from the 88-year-old Berkshire Hathaway CEO. All that while, Buffett kept being bullish about other businesses, and even at this time of distress, he is still holding his horses.
Contrastingly, one of the biggest influencers of the crypto industry, John McAfee, who also happens to be among the firsts who predicted that Bitcoin would reach the million-dollar mark in the next couple of years, has shifted his stand drastically. After being the fiercest promoters of the apex digital currency for years, McAfee recently stated that Bitcoin is the true “shitcoin,” which has left many of the investors perturbed.
It makes the question among all the major crypto players, including those who said that people who sold BTC below $10,000 must slap themselves. CEOs and Founders who used to quote McAfee, and considered him to be a credible influencer, have several questions to answer before debunking his recently shifted stand.
So, where’s the market heading?
Firstly, based on the track record, this could be an excellent opportunity for those who want to step in the Bitcoin markets. With BTC prices as low as $5,300, any rise in the market, which could well be over $10,000 in the next few months, will be a boon.
Secondly, considering McAfee’s point, this could be the point where Bitcoin stabilizes, or rather, stagnates. If that’s the case, we could see the rise of other cryptocurrencies like Ethereum, Litecoin, Bitcoin Cash, etc., as they would provide better returns in the coming months.
Thirdly, this could just be proof that there’s a cycle on Bitcoin ups and downs, which repeats itself every 12–15 months. Keeping aside the mid-year spike, Bitcoin is currently priced around what it was a year ago. The only difference, in this case, could be that with every cycle, the lower and upper limits will grow, not rapidly, but in small and continuous amounts.
Last but not least, this could simply be another volatile face of Bitcoin, which is quite hard to comprehend. There could be a drop of a rise in BTC price for no reason, and this could just be one of those drops.
However, the likelihood of this scenario seems lesser at the moment than others, because it is not only BTC but the entire global financial system that is suffering through an undeclared recession. Over and above, the Coronavirus outbreak is another factor that could be a reason for this volatility.
What should you do?
At this moment, the best thing to do is to remain patient and give some more time to the industry. If you own Bitcoin, try to hold it for a longer period, at least till the Coronavirus pandemic passes away and the global financial markets recover. Once that happens, we would have a clearer reflection of the true reasons for the downfall, and only then one can be in a position to judge the market appropriately.