Many experts and market watchers have rightly prophesied that 2018 will be a year of extreme highs and lows for Bitcoin and other cryptocurrencies. Some say the price of Bitcoin hitting the roof with $20,000 at the end of 2017 was simply a result of hype that would inevitably lead to a plunge once the stir fades away. Now that the dip has occurred, the question on the mind of many investors is whether Bitcoin will be recovering any time soon.
Where does Bitcoin stand now?
In a market where volatility is the order of the day, it is not unusual for the value of coins to fall and rise significantly overnight. The skeptics are quick to declare that the end of Bitcoin is here and that the bubble has finally burst. But knowing that this is a regular chant whenever price plunges, it is hard for Bitcoin enthusiasts to agree.
With Bitcoin standing at just a little above $6,300 (as of 16 July 2018), it is time for investors to calculate their losses or wait patiently for the coin to bounce back in the near future. A look at the past will reveal Bitcoin’s notoriously volatile nature. We have seen the coin drop very low in the past only to make a dramatic turnaround afterward and destroy its previous high.
All-time highs, November 2013: Mid-November saw the price of Bitcoin go to $800 for the first time in its history and plunge back to $450 overnight. This translates to an almost 50% decrease in value, which is not feasible for the traditional stock market. Some might have been claiming that was the very moment the Bitcoin bubble burst, but by the end of the month, the coin shook the crypto world by reaching $1,000.
Tough decline, 2014-2015: Looking back at this period, it is clear that the Bitcoin investors were experiencing heavy losses, seeing the price of the coin nosedive from well over $900 to $200. Bitcoin closed 2015 at $400, though – ready to start its recovery.
The recovery, 2016: At the beginning of 2016 Bitcoin was struggling to settle at the $400-ish mark, but this was finally achieved in March 2016. From there on, the price steadily increased and by the end of the year, it finally tested $1,000 for the second time in its history.
The golden age, 2017: There is no need to go through 2017 in much detail, as anyone who heard about Bitcoin at least once knows about its unprecedented jump in price to over $20,000 in December. This was certainly the prosperous era for Bitcoin and its holders.
Following the striking surge in price in December 2017, it is fair to say that Bitcoin is now on a downward spiral and whether it will recover remains to be seen.
Two scenarios are possible
Bitcoin’s erratic performance in the past few months is mainly a result of the regulatory crackdown and correction that the overall cryptocurrency market has witnessed. But if you consider the fact that we’re talking about a coin that was trading at a value of $2,500 around this same time last year, anticipating a dramatic recovery isn’t something that is so hard to grasp.
To put things in perspective, the total market cap of all cryptocurrencies stands at a whopping $260 billion; comparing that side by side with the last year’s value of $85 billion shows that the crypto market has really grown, and the issue of whether Bitcoin is here to stay can be taken off the table. Thus, predicting a total doom for the cryptocurrency that holds almost half of the total market cap might sound like a ridiculous idea rather than an accurate prediction.
On the other hand, skeptics are of the opinion that blockchain, the technology behind Bitcoin and other cryptocurrencies, is what’s here to stay rather than the coins themselves. As the future will see a wider variety of applications for blockchain tech in the fields beyond finance, Bitcoin might lose the edge and follow the downward trend, putting an end to the digital gold rush.
So, what’s next?
While it may appear that Bitcoin has reached the point of no return, technical analysis and evaluation of the relative strength index shows that positive days are coming. The RSI value of about 30 indicates that the coin is largely oversold and thus can be predicted to be in a bottomed-out state with the only possible direction being an upward movement rather than a downward trend.
Still, some experts are not too confident about the ability of the coin to rally and believe Bitcoin will only recover if certain underlying events that can push price upward occur. Considering the fact that the value of Bitcoin has dropped by over 50% this year alone, there are opinions that before the current downward trend can be reversed, Bitcoin needs to settle around $7,000.
But recent events, including the reported hack of a Korean cryptocurrency exchange, as well as a report on the Wall Street Journal about investigations of possible price manipulation within some leading exchanges, might take a toll on the coin that is currently struggling hard to recover.
Even in the current chaotic and troubled state, the profitability of investing in Bitcoin isn’t by any means in question at all. Despite uncertainties, many would still say it is not a bad time to invest yet. Whether you follow that or not is up to you.
Business decisions, especially those that involve highly volatile coins like Bitcoin, should be subject to serious considerations, and a final decision should be made only when duly satisfied with the profitability of investing. Thus, whether Bitcoin recovers immediately or does so later, what’s more important is your assessment of the market and an informed decision to stay on the Bitcoin bandwagon or explore other options.