Bitcoin’s Current Price Drop The Smallest Market Correction To Date

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As the Bitcoin (BTC) bear market continues, the price of the leading cryptocurrency has dropped to a new yearly low, flirting with $3,500.

Although this bear market, which has persisted since the very beginning of the year, is devastating to traders and HODLers alike, the bear market is actually the smallest in Bitcoin’s history when comparing recent lows to the highs of the bull run.

DateHighLow%Recovery period

(weeks)

2018$19,891$3,58582.0%
2013 – 2015$1,141$15286.7%169
2013$259$4582.6%30
2011$12$283.3%53
2011$35$294.3%81
Average85.8%67

 

The table shows that, while BTC was at $3,585 yesterday, it had lost 82% from its all-time high price of $19,891. Comparing this to other past major price drops that happened in 2011, 2013, and 2015, when Bitcoin declined by 86.7% on average, the 2018 bear market is still comparatively less bad.

Although better in terms of %, this bear market was arguably the hardest to endure as it was when Bitcoin and cryptocurrencies really started taking on the mainstream.

With the most recent sell-off, BTC also breached an 80% decline since its highest peak, and it doesn’t look like it means to stop as it is currently at the 82% mark.

The Fibonacci retracement shows that the number one cryptocurrency is steadily reaching a retracement value of 100% from peak, which is at around $2,800 seen in September last year.

Nevertheless, between the current price and the mentioned bottom, there is a support test at $3,500, but looking at how BTC easily broke through the last one, psychology may be getting the best of traders.

Bitcoin’s Current Price Drop The Smallest Market Correction To Date

The lack of liquidity and investment vehicles

According to the Susquehanna executive, Bart Smith, there are two main reasons for BTC’s behavior.

As a first problem, Smith points out that there is not enough liquidity in the Bitcoin markets to absorb some negative events, such as quarrelsome forks that we witnessed recently.

Secondly, he detects that the lack of compliant investment vehicles doesn’t help when the wider adoption is concerned. Still, he expressed his opinion that Bakkt’s daily Bitcoin futures contracts and Fidelity’s trading and storage platform can help Bitcoin reach a wider audience.

The perspective

In comparison with the big retracement form 2015, which took 86.7% of the BTC’s price away, the current state of cryptocurrency market is said to be far more favorable, because the last time the market witnessed this kind of negative sentiment, the only possible catalyst for the reversal was the news of a few merchant adoptions.

Therefore, despite the fact that the current market situation leaves a little to be positive about for the majority of cryptocurrency investors, some veterans of the investment business acknowledge that the recent development of cryptocurrencies can be a springboard for some new all-time highs.

Among those experts are, besides Bart Smith, billionaire investor Tim Draper, and Mike Novogratz, who use every opportunity to try to reassure those with weak hands that there is something to be positive about in the long run.

The launch of Bakkt’s cryptocurrency investment product is scheduled for January 2019, and it is said to have the potential to overturn the current depressive state of the market.

Bakkt, Fidelity, and the likes of VanEck, with their Bitcoin ETF rule change proposal filed with the SEC, are all looking to bring in institutional investors in the game. Although it is still too early to say if they will be successful, there is certainly something to look forward to at the beginning of 2019. 


Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your own research and/or consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.

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