Here’s Why You Shouldn’t Panic About Bitcoin Price Dropping Under $30k
The volatility in the cryptocurrency market can really scare you, especially if you are new to the market.
Just as the price can go from $10,000 to $20,000 in two months then to $42,000 in less than a month, the depreciation can be just as heightened.
On Thursday night or early Friday morning, the price of BTC dropped just under $29,000. However, the market is already seeing some recovery, with Bitcoin now trading around $32,000 and ETH above $1,200.
With funding flat, quarterlies having come down to the 10%-14% range, Coinbase Premium seems to be positive again, GBTC premium all but vanishing at just 2.77%, the USD topping out, and the macro narrative supportive, trader and economist Alex Kruger calls for recovery to $35,000.
However, the dip isn’t over, and the trader expects $28,000 in the near term still. Other traders see the possibility of a drop to $27k too.
Going to bed, I'm undecided if what we had tonight is -the flush- or not.
We're looking at -31.5% peak to trough as it stands, which is certainly in line with the 30%+ drawdowns we're used to seeing, but I wouldn't rule out one more flush to a -35% or more drawdown from the top. https://t.co/MDOLUzAI8R
— Jonny Moe (@JonnyMoeTrades) January 22, 2021
As we have been seeing the market for the last two weeks, the leading digital asset has declined 30% in value. This is in line with the average 30% pullbacks seen in 2017. Trader and popular crypto personality CryptoCobain noted,
“The first dip of the bull market is the worst dip of the bull market. The 2017 run dip at ~3000 took 4 weeks and almost convinced me we were dead.”
And if the deep pullback is still making you panic, remember that people have sold their BTC only to regret it later, a decade back too.
— CZ 🔶 Binance (@cz_binance) January 21, 2021
If the dip has panicked you not to buy it, you might want to take a look at other people’s stories as well and prevent yourself from FOMOing in at the top.
im such an idiot https://t.co/Az8E5QGuJA
— Nick Allen (@NickAllen) January 21, 2021
Interestingly, despite the drop in Bitcoin price, it is still at the level we were at earlier this month.
Several factors, including the technicals, actually caused this decline; healthy consolidation was to be expected after the market went up 1,000% from March lows. While no FUD could rattle Bitcoin during the bull market, during the red, it only added to the panic, and this time several FUD made an appearance, from Tether, the UK financial watchdog issuing its stapled investment warning, Mt. Gox BTC, and the latest double-spending.
Even the likes of Scott Minerd, the CIO of Guggenheim Investments, contributed to the market weakness by calling out the market top and advising people to take profits off the table.
However, Minerd actively trying to talk down Bitcoin’s price makes sense given that “Minerd is looking to, but has yet to execute on, allocating 10% of his portfolio into bitcoin. So even though he seems like an upstanding guy, there's certainly room to question his motives,” said analyst Mati Greenspan.