The Real Story Behind the Bitcoin Price Collapse

As many of you have pointed out correctly, the mainstream establishment pulverized the bitcoin price for two primary reasons.

First, they wanted to push everyone out of the cryptocurrency sphere, thereby allowing them a dominant market share. Second, and closely related, the bitcoin price collapse allowed them to fortuitously jump in at insane discounts.

While I've also argued these very same fundamentals, I also want to present the point-of-view that the bitcoin price was technically necessary for the cryptocurrency market to hit fresh milestones.

Bitcoin Price (Trading) Sentiment

Take a look at my bitcoin trading sentiment analysis, which compares the bitcoin price to market volatility on a monthly average basis:

I could go on for days about this analysis, but I'll try to keep it short and in English!

In a nutshell, normal bitcoin trading on a month-to-month basis should occur within a range of +30% to -30%. This is further confirmed by the linear trend line, which averages 10% before it curves dramatically upward at around the $3,000 bitcoin price point.

What happened?

The cryptocurrency market simply went ballistic. Note that beyond $3,000, we hardly see any corrections at all. Also note that all bullish price moves were outliers, in that they went above and beyond the normal trading range.

The Bitcoin Price Collapse was Necessary

At the tail end of the bullish trading spectrum, the bitcoin trading magnitude hit a wicked high, a major outlier compared to previous trading activity.

To counteract this, and other outliers, a steep and unprecedented correction was necessary. This explains the negative major outlier, which is the magnitude drop from January to February (until now).

In fact, if February were to end now, this would represent the steepest bitcoin price drop since April 2013!

So, my friends, don't panic! This bitcoin price collapse was absolutely necessary for the longer-term health of the cryptocurrency market!