Why The Price Of Bitcoin Has Tanked (And Why This Is Good)steemCreated with Sketch.

in bitcoin •  3 months ago

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What is happening with the value of Bitcoin? Why is it dropping? Will it drop more? How low will it go? Why is this price action a good thing?

These are all good questions. But be leery of anyone whom answers with 100% certainty. My perspective is only a culmination of my thoughts and experiences having spent 7 years studying and investing the BTC markets. This is not professional investment advice, only an explanation of my observations.

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So what is happening with the value of Bitcoin?

Towards the end of 2017 and the beginning of 2018, Btc was setting all time highs in USD and other fiat currencies. Heck, it was even rising against most prominent cryptocurrencies. But, not everything was going so well. The network was overloaded, transaction processing times were excessive with some users waiting days for their payments to clear, and the cost of sending funds even topped $50 per transaction!

But how could the network be under so much strain and still be setting all time highs? Believe it or not, the answer is simple really: market psychology. The price having increased steadily with time, and then more so during 2017, was in a positive feedback loop. It was tough to tell at the time, but I think rather easy to spot now, looking on say a 4 year graph. Positive price action created more enthusiasm, onboarded more users and its value continued to increase as unseasoned investors poured into the space, feeling as if the trend could go on forever. But it didn’t. And just as euphoria caused a parabolic price increase, now the recent downward price action begets more downward price action.

So where technology can often evolve, human nature does not. The price of Bitcoin is not representative of its market fundamentals but is rather a glimpse into the general perception of the market. Improvements in the technology will leave no meaningful impact on the price trend in a down market. Simply put: price action is a function of the psychology of crowds.

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Will It Drop More?
How Low Could The Btc Price Go?

Of course this is only my perspective and so I recommend that you to seek many others and then make up your own mind. While I won’t throw out an exact figure or date, I do not think we’re yet at the bottom with either metric. Historically, major lows in the Btc market have occurred when all hope of an appreciating price is gone and has been, for weeks or months.

So my intuition, based off what I’ve witnessed in past examples of market psychology, is that the price will cut sideways for several more months but gradually trend down until sometime in between December 2018 and April 2019. I think the price will mostly stabilize around $3000 in there, with occasional, terrifying dips, eventually bouncing off of $2000. It’s at that point I suspect the market will start to build back up as more buys see value in the platform than sellers have coins to sell.

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Why is this price action a good thing?

In short, this provides an excellent buying opportunity to secure btc at a more reasonable price, ahead of it's next parabolic move upwards. I believe one factor that will help to shape positive market psychology is the Btc halvening, due mid year 2020. I suspect that market bids will increase around the 1 year out mark and gradually rise to basically a “non-event” when the halvening does occur.

If I’m right, then this should create a sideways market through 2020, with plenty of ups and downs. However, the supply halvening will eventually be felt in the markets and I’m confident Btc prices will gradually build as they did first in 2016 and more so in 2017, this time crescendoing well into 2022. So the silver lining is that we may have an excellent entry point for the next parabolic bull run.

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Closing Thoughts

Unless you’re a professional trader, making money in Btc is a long game. 2022 looks to be a fantastic year but to take advantage of what may be highs into the hundreds of thousands (USD), a purchase during a cycle low will be necessary. While I can’t say what’s best for anyone but me, I can say that I plan to roll fiat profits back into Btc, during the window I’ve mentioned and at the price points I’m targeting.

If you want to see if my projections are close or way off, be sure to follow me on Steemit as @watershed. If you’d like to hear more of my thoughts on the crypto market, be sure to let me know through a comment and upvote! :)

Best to you all in the meantime!!

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Very confusing

Great read @watershed , I concur, that 2020 halving, prime time for me on the horizon lol. Let the ledger fill up begin lol. Great write up buddy, well done!!

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Hey, I appreciate it. I had trouble finding helpful info during the crash of 2014, so hopefully this insight can help others finding themselves in a similar situation now.

I'd agree with this if bitcoin was still the only thing doing what it does.
It's old, and slow and expensive, and I dread using it.
Last transaction I did took 15 hours. I don't see it coming back from this dip, to be honest. The only advantage it had over a hundred grandchildren, (like STEEM) was it's relative stability.
I can see it drifting sideways, then tapering off until 10% market dominance, before rapidly dropping away to insignificance.
NB: It breaks my heart to say this. I've loved Bitcoin since 2012.

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Believe me, I've previously shared these frustrations with you. Regarding the market share, I suspect you're correct. I think so many new projects will be created that it continues watering down market share dominance BUT, I think due to various other factors, its value in fiat terms will continue to increase. My thinking currently is that btc has found utility as the premier exchange pair, various businesses and online markets, etc. so with it's brand recognition, first mover advantage, network effect, fixed supply and continued development, I think it will serve as the golden standard for a long time. It will sure be interesting to witness. :)

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Hi, I agree with both of you but I have to admit my heart goes to Ethereum which seems to be full of opportunities! @watershed everything you say is right but I'm having some issues finding intrinsic value to BTC compared to other crypto such as ETH or STEEM.. Anyway, with some changes, you approach can be generalize to others cryptos.
I look forward to see what's going to happen too :)

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Yes, it should be a wild ride for most quality projects. I've not come across any other market as exciting as crypto.

My thoughts coincide with yours 100%
BTC is here forever. It's a revolutionary upgrade to our human nature of trading and bartering for the technological age. All great things take time, and even greater things take even more time. The BTC blockchain has not failed 1 time since it's creation. This is a long term game. Keep your vision up :) Keep stacking $$$

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Thanks man!
Can't wait to see what all btc achieves in the future.

Hello watershed,

I think bitcoin market dump is now over as per my knowledge. It should start pumping now.

There was several reason of market crash. The first reason was hacked of korean exchange Coinrail. the Second was investigation of US Authority for price manipulation of crypto. and Third was Bithumb Hacked issue.

Due to this 3 major reason bitcoin was crashed to around $5800. But hopefully everything is now on the right track. So it should start to the bullish way.

Thanks for this article, maybe i am not sure but i just shard what i know. But atleast everyone could share their own opinion here, so thanks to you.

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Thank you for your thoughts.
I'm sticking to the outline in my write up but I hope you're right. :)

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@rjfinance sir you are absolutely right, in addition to 3reasons i think there is always one more reason whale manipulation. Sorry for unwanted opinion.

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Appreciate your words. All opinions are welcomed as understanding many perspectives is imperative towards deciding on which one to support.

I agree with you.. but I think Bitcoin wiil take long time.. to maintain highest level.. plz upvote & cmnt my post

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Yes, I think it will likely be 2020-2021 before we see a new ATH. Just my feeling.

Bitcoin is down but when it will pump it will give good profit @watershed

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I suspect you're correct.

Muy buena la información. Gracias!

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El gusto es mio. ;)

This is a well written and well thought out introspection. I tend to agree on most points. Part of my gut has me feeling like we are currently in a (possibly) short term hovering point, and depending on news or excitement we could see things turn as far as price. However the pessimist in me agrees with your time frame more. I can say I get this nagging feeling that whatever I buy I will regret not buying more later. Keep up the good work I will check back often!

Z

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Yes, my feeling is that it's rarely a good idea to be all out of the crypto market... or all in. Too many variables to guarantee price action.

ok good, but exception more than price of btc down not good

My gods are telling me we will recover to around 11k then a major correction to 4k i really doubt if we will reach 2k.

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trust me it won't go that much low, Market is recovering slowly.

Will it be 20k in december 2018?

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