Last Updated: 26 June 2022
If you can no longer see the forest for the trees, it is advisable to take a step back. This also applies to bitcoin. How do you keep perspective when the price keeps falling? By zooming out on the chart, you can see that large declines are quite normal for bitcoin.
If bitcoin were to follow the pattern of previous large declines, then there are some pains ahead. Or a nice buying opportunity, as according to the models,’ bitcoin could then fall to $10,350.
Source: Arcane Research
In the chart above, the red line is the current decline. The starting point was taken at the previous all time high in November 2021. The red line runs until 21 June and is 222 days long.
The other coloured lines laid across the chart represent previous cycles of April 2013, November 2013, December 2017, and April 2021.
2013 and 2017 were worse
During the current 222-day drop, the bitcoin price has fallen 73%, and this feels incredibly painful for many. But bitcoin OGs were tested much harder in 2013 and 2017.
After the bitcoin price peaked in November 2013, it took 407 days and an 85% drop before it hit bottom. This is similar to what happened after December 2017, when bitcoin reached its then all-time-high of 20 thousand dollars. It then took 364 days, and a drop of 84%, before the bottom was reached, and bitcoin was able to climb again.
Does the bottom lie at 10,350 dollars?
Purely hypothetically, but assuming bitcoin followed the laid-out blueprint of all these cycles, a bottom should be reached sometime in late 2022. And if the decline is as severe as in 2013 and 2017, the bottom could be at $10,350.
In practice, the current situation seems different from the previous cycles. The entire economy seems to be heading towards a recession, and bitcoin is now much more intertwined with the overall financial markets. As a result, the strength of the dollar (read: decisions by the US central bank), global regulation, and the equity markets are affecting bitcoin’s performance.
True OGs know the tricks of the trade, and they know that friction makes shine. Not every stomach is strong enough to profit from an investment with asymmetrical potential.