Even though this year was supposed to be Bitcoin’s year, the market is not looking so good right now. Bitcoin quickly decreased from over $10,000 in February to under $5,000 in March. But could the king of cryptocurrencies do another comeback?
As you may have heard, the news about the latest coronavirus affected the world and its economy as we know. Dow Jones had a massive decline too, losing almost 30% from January until march.
And crypto is not different at all, but the loss is higher. The market capitalization of Dow Jones is 6.56 trillion USD as per december 2018. Which means there are a supply and demand big enough. Even like that, the price decreased as a lot of people sold it in preparation for a crisis. The market capitalization of the entire crypto market is under $150 billion right now. And Bitcoin has a dominance of 64%.
If we compare the two market capitalizations and the decline, we understand that people are preparing for a crisis. And they’re selling the things that can damage their wealth. Bitcoin, stock market assets and CFDs are pretty much high risk right now – as their price depends on the public feeling.
And the public feeling is fear, uncertainty, and doubts.
However, we need to take some things into consideration before panicking and selling:
- Bitcoin is highly volatile – Like any other cryptocurrency, bitcoin has high ups and downs. If in the stock market a crash of 5% per day is a disaster – for bitcoin or other cryptocurrencies is something normal. People trade and make a profit from this ups and downs or they buy it when it’s lower and wait for it to come back again. Indeed, the king never reached the $20,000 mark from December 2018, but it got to over $12,000 in July 2019.
- There are people using it only for its purpose, a peer-to-peer electronic cash system – not everyone does trading. A lot of people only buy it to send money to a friend and escape the high fees of the banks. And where there’s a use case, there’s also organic growth and adoption. The adoption level increased since 2018, as more and more people understood what Bitcoin stands for.
- Hodlers won’t sell – There are hodlers that are keeping bitcoin since 2010 or 2014 or even 2017. Most of them won’t sell and will probably use this period to buy even more. As Warren Buffett said that its wise to be “fearful when others are greedy and greedy when others are fearful”. But of course, that doesn’t mean to go all in and risk everything – only some funds that you can afford to have them locked for a certain period.
- It can drop even more – but it can also increase rapidly over the next few weeks – Right now, the world’s panicked over coronavirus. But whenever the panic will disappear, people will start investing their funds again. As it’s the halving year for bitcoin, there’s a huge expectancy that bitcoin will rise at least to $10,000 levels or at least return to a more ‘normal’ value.
In conclusion, bitcoin can surely have a fast comeback and pass $10,000 again this year. However, in a situation like this it’s better if you focus your attention to earn crypto by working remotely or trading instead of investing a lot of funds. After all, it can easily crash to $2500 or it can easily get back to $8,000.
Just like a coin flip, the price is determined now by people that are panic selling and people that are looking to buy bitcoin at a cheaper price – which one of them are you?