Some Thoughts on Bitcoin’s Recent Price Volatility

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Chesnot / Getty Images

Note: This article is not intended to be formal financial advice; always do your own research before investing.

Bitcoin hit a 40-day low of $47,272 on April 25 after an impressive run to start the year. And like every dip, bears are out of hibernation again, telling us Bitcoin reached its peak. But I’m not worried about the recent price drop.

The downturn began after Turkey banned Bitcoin payments, highlighting concerns about government crackdowns on cryptocurrencies going forward. The price drop prompted realistic concerns about Bitcoin’s future outlook. But have we really reached peak levels?

Let’s take a closer look at Bitcoin’s historical data. It’ll show us why we are on the verge of another bull run.

Bitcoin trends since 2017:

Bitcoin has made about four major jumps since 2017. Obviously, there are different ways to define a “jump”. For this exercise, we are going to look at instances when Bitcoin pumped over 100% growth within a period of a few weeks.

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In 2017, Bitcoin had a historic year. It doubled in just four weeks from April to May and then exploded in the fall, jumping from around $3,000 to a whopping $19,000/coin. We all know what happened next. Bitcoin plummeted back down to $8000, then landed and stabilized around the $6,000 mark for most of 2018.

The next major push came in the summer of 2019, when prices quadrupled in a matter of weeks. After reaching a peak of $12,000 in that bull run, prices fell as low as $7000. This was about the price of Bitcoin when the COVID-19 pandemic began.

Through the first four months of the pandemic, Bitcoin rose around 100% as governments around the world printed trillions of fiat dollars to keep up with a flattened global economy. 22% of USD in circulation was printed in 2020 alone. Most notably, Bitcoin redefined itself in 2020 as more than just a tool for financial crime. Suddenly, it became a legitimate, viable world currency after years of criticism.

Bitcoin’s latest push came faster than ever before. After a quiet few months, Bitcoin grew from $11,000 to $40,000 from the end of 2020 into 2021. Prices dropped to $30,000, before quickly doubling to $60,000. If we are playing charts, we may be at the back-end of another drop period... with a bull run on the horizon.

The difference between 2021 and 2018 Bitcoin:

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Jared Wolf / imgflip

Based on historical data, Bitcoin took about 12-18 months to reach its next macro-level bull run after hitting a peak. But this is not the same Bitcoin we knew in 2018.

Over the last few months, thousands of old-world portfolio managers embraced crypto. Heck, BTC has become a ticker mainstay on CNBC. Whoever thought that would happen? But the interesting thing is, none of these people embraced Bitcoin because they wanted to, they embraced it because they had to. “Follow the money”.

Major companies like Square and Paypal use Bitcoin to store cash reserves and enhance their user experience. In March, the Dallas Mavericks (led by Mark Cuban) announced they would be the first NBA team to accept Dogecoin for tickets and merch.

TL;DR: The crypto market is nothing like it was three years ago. It’s like comparing 2008 Facebook to 2016 Facebook.

On the verge of a Bitcoin bull run:

All the indicators point to another bull run for Bitcoin. I’m not worried about this price drop. In fact, if you are one of those people who missed the boat on BTC completely but don’t want to dive into the volatile, confusing world of altcoins, this may be a good time to jump in.

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