Hello again everybody. So in my second post of the day I wanted to talk about when and where I think Bitcoin could see it's true bottom. I got the idea to post this talking to someone here on Steemit today and without further ado, let's get straight into it!
First of all I want to say that I believe Bitcoin has only ever had two bubbles. One which started in October of 2013, peaked at the end of November 2013 and finished bursting/crashing around January 2015. After this massive rally upwards and crash, prices then stayed within the $200 to $400 range for about 10 months. You can see that here:
You can also see at the right hand side of that chart the most recent crazy run up to 20k. So I believe this shows that there have only been two actual bubbles for Bitcoin ever. People point out that bitcoin has "retraced"/crashed plenty of times but there is a big difference between an actual bubble and a fairly large retracement in price.
Now what happens after bubbles in financial markets? Well simply put confidence doesn't rebound up from panic over night (wouldn't it be awesome if it did!). It takes time for the general public to forget about all the people who lost their life savings, or just a lot of money in general (including the people themselves who lost a lot of money) from the horrific crash from $20,000 to $6,000 (and most likely lower I believe).
Above shows the NASDAQ took about as long to hit all-time highs again as it took for the bubble to play out. If we compare this to the current Bitcoin Bubble...
This bubble has been playing out for about 15 months now and will most likely be at least another month until we hit true bottom I think. Let's say we bottom in a month, that's 16 months it took to play out. So I wouldn't be surprised if it takes a year to hit $20,000 again.
My belief is that all bubbles play out roughly the same because human nature is pretty much a constant. So if the Bitcoin bubble is similar to the NASDAQ bubble (and as I say it should be because both markets are based on human nature), then it could take us a year or more to see $20,000 again (if we ever do see that again of course, nothing in investing is guaranteed).
The first bubble in Bitcoin seemed to follow this general pattern in that it took 17 months for the bubble to play out and about 2 years to see all-time high prices again.
Obviously these numbers are just general and not some specific formula, but the overall point is that a bubble doesn't just occur, top out, and then crash and zoom back up to all-time highs... It takes a fair amount of time before confidence comes back into the market, this is just human nature. So I am not saying to people don't HODL, but if you are HODLing expect to wait up to a year to see profit if you bought at the top!
Thank you for reading and have a wonderful day!
Legal Disclaimer: This is just my analysis and not to be taken as professional financial advice. Do your own research beyond what you read in my blog posts and make your own decisions based on your beliefs about what to invest your money in.
