Last Updated: 18 July 2022
Last night, bitcoin was briefly worth $21,150, but this has now been reduced by a few hundred. The price has been moving around $20,000 for a while now with a few lows and highs. Does this mean bitcoin could be dead? (spoiler: no)
What does $20,000 mean for bitcoin?
Below is the bitcoin price, the blue line is placed exactly at $20,000. Since the drop on June 13, the price has been dancing at or just below that blue line. This is the first time in bitcoin’s history that the price has hovered around this price level.
Indeed, this price level was the peak at the end of 2017, bitcoin was able to hold this level for a few seconds before the bear market of 2018 began. At the end of 2020, this level was a resistance area for a short time. It took three weeks for the price to break out of this.
Not surprisingly, many who bought bitcoin in 2017 still had their sell orders set at $20,000.
Perspective and context are so incredibly important in this regard. For years, $20,000 was an all-time high and from early 2018 to late 2020, this price seemed impossible to achieve. Today, bitcoin at $20,000 is seen as low.
Bitcoin is Dead in 2022
Bitcoin at $20,000 is now seen as a death sentence, for the umpteenth time articles appear in the media writing off bitcoin. Just like in 2018, 2017, 2015,2014 and 2011. It is a good thing that the website Bitcoin Obituaries keeps track of the number of death sentences, so that these articles can always be put into perspective. By the way, in 2022, the counter stands at 21 death declarations.
The sentiment around the price becomes predictable at some point. There is the quadrennial bitcoin halving, which is followed by a bull market in which everyone is euphoric, and then the price collapses, causing bitcoin to be declared dead again.
That pattern has also been noted by Jordan Belfort, best known for The Wolf of Wall Street, a film about his life. He says anyone who buys bitcoin now will eventually be in the black.
Making money within two years
At the end of June, Belfort was a guest of Yahoo Finance UK to talk about bitcoin. “With any luck, I think if you take a 24-month horizon, you will almost certainly make money,” Belfort said during the interview.
What a difference from the person he was during Wolf of Wall Street. In that film, he is portrayed as someone who wants to make quick money with penny stocks on everyone’s back. In the meantime, he seems to have turned his attention to the long term.
“If you take a horizon of three or maybe five years, I would be shocked if you didn’t make money, because the underlying fundamentals of bitcoin are very strong.”
Stronger than ever
The underlying fundamentals are stronger than ever. The following chart gives you an idea of the exponential growth of the network. Below is the processing power available on the bitcoin network. The processing power of all the miners on the bitcoin network continues to grow.
Even though the price has dropped to $20,000, miners apparently still find it financially sound to mine bitcoin and secure the network.
The moderator asked Belfort about his top three long-term investments. Belfort responded by recommending bitcoin, ethereum and bitcoin as his first, second and third favourite choices.