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Firstly I won’t want us to be negative .Bitcoin is one of the greatest investment assets in the whole universe but recent activities of happening in the price of Bitcoin has left panic in the mind of people especially inexperienced investors. Whenever bitcoin prices comes nearer to historical highs, every investor should should think typically before making a decision about the currency, think about the end of 2016, when Bitcoin approached $1000.
However, as far back in the late 2013,bitcoin broke the $1000 mark in which many experienced Bitcoin will remember ,prices goes dramatically down after reaching its peak ,which later gained value, then suffered a long-term collapse shortly after.
A lot of Bitcoin investors lost money by this sudden weaken value of Bitcoin back then, some lost fortunes. So are Bitcoin prices destined to dramatically goes down whenever its reaching near an historical highs or do we think 2013 is a one-time occurrence? First let’s have a look at the below bitcoin historical price chart.
Now before I proceed, it’s necessary to take point of the key difference between the first $1000 boom and the second surge in 2016. Take a look at the chart above; you will discover how the first time Bitcoin drastically goes up from less than $250 to $1000 in a matter of just few weeks? Now focus on the second half of the chart, the rate at which it goes up was much more higher and stable.
If you understand this ,you will notice that the first $1000 peak was as a result of clear over excitement. Bitcoin was newly introduced, it was hot , money was been pumped into it and this caused the price of Bitcoin to surge. As the price started to increase, lots of people jumped on the trend with the mindset of tapping from the rising prices of biotin.
The intelligent and prudent investors started to discover that the sudden increase in value of bitcoin wasn’t due to its fundamental value (at the time) but over excitement, so they started selling and more people began to sell ,prices continue to drop ,then people to continue to panic, thus creating uncontrollable impulse that led to prices eventually collapsing and those that couldn’t leave early enough lost a lots of money.
As an investor , if you discover prices of Bitcoin going up at a unnatural and increasing rate, you need to keep a close watch on markets.Bitcoin has been and is still one of the greatest investment vehicle in the world,regardless of its investment prospect, it will experience price drops and also enjoy price increase. Anticipate for my next blog on "AS A SAFE ASSET, BITCOIN CAN SUFFER FROM FLEEING INVESTORS"
Thanks for reading