Bitcoin: Where’s the Bottom for the Key Crypto?
Everywhere in the crypto market, there is red and a lot of pain.
The neighbor, the friend, the girlfriend, the grandmother, the cousin, the mother, the colleague, the professional investor: All had been persuaded to put their investment and savings dollars into crypto, based on FOMO — fear of missing out. All have seen their money melt away.
The past few months have looked like hell. And today they are wondering whether the market has reached bottom and perhaps they can recoup at least a portion of their starting bets.
Some were told that bitcoin and crypto were a hedge against inflation, and they were reassured when inflation spiked. Now, they are told that crypto is correlated with the equity markets, more particularly with the tech groups, and they feel the world slipping out from under their feet.
Many investors who bet on tech also put their money into bitcoin and alt coins, industry sources say. So they effectively treat crypto as a risky asset. And as soon as fears about growth increase, they liquidate these risky assets. This is what has happened, and many less sophisticated investors are left holding the bag.
A number of economists say that the Federal Reserve’s interest-rate hikes will cause a hard landing for the economy.
Bitcoin is currently trading around $31,000 and on May 9 it even fell below $30,000. The largest cryptocurrency is trading about 53% below its life high of $69,044.77, touched on Nov. 10.
Ether, the native token of Ethereum, the popular blockchain of NFTs and decentralized finance, has lost almost half its value compared with its all-time high.
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Dogecoin, Tesla (TSLA) – Get Tesla Inc Report Chief Executive Elon Musk’s favorite coin, is down more than 84% from its May 8, 2021, record level of $0.731578.
Overall, the crypto market, which hit $3 trillion of value in November, has fallen to $1.55 trillion, according to data firm CoinGecko.
The History of Major Bitcoin Corrections
If past is prologue, the correction in bitcoin is far from over.
Based on last November’s highs, the current correction is in its 180th day. This correction is the third longest in the short history of bitcoin.
Two other corrections exceeded 180 days: one from Dec. 17, 2017, to Dec. 15, 2018, and one from April 10, 2013, to Jan. 14, 2015.
The first lasted 363 days, almost a year. Bitcoin went from a high of $19,783 to a low of $3,122, down 84%. Bitcoin needed 1,079 days — nearly three years — to set a new high after this correction. That high was reached on Nov. 30, 2020.
The correction that started on April 10, 2013, lasted 410 days, making it the longest. Bitcoin in that period fell 85% to $170 from $1,166. And again it took three years — 1,181 days — for the king of cryptocurrencies to set a new record. That new record was reached on Feb. 23, 2017.
One (relative) bright spot: Bitcoin took 631 days — 21 months — to set a new high after the 162-day correction from June 8, 2011, to Nov. 17, 2011. At the time, bitcoin fell 94% from $32 to $1.99. The new record was reached on Feb. 28, 2013.
