The big news of the morning is that Bitcoin has fallen dramatically from around $40,500 to $32,500, a drop of around 20%. Here’s some historical crashes during previous Bitcoin rallies.
2013 Run Up:
- Bitcoin grew from $125 to $1,100 and the rise was marked by almost constant increases, with corrections of no more than 15%.
- Shortly after breaching $1,000, Bitcoin crashed about 50% to $550, which signaled the start of a two-year bear market.
2017 Bull Market:
- Bitcoin grew from about $1,000 to $20,000, but it was marked by much higher volatility.
- June 2017 saw a month-long correction of 29% after hitting $2,900.
- September 2017 saw a quick 25% correction after hitting $4,900.
- November 2017 saw a quick 20% correction after hitting $7,500.
- After that, Bitcoin ran up from $6,500 to $20,000 within a month, before promptly crashing 35%, which signaled the start of another two year “bear market”.
Each time Bitcoin has made a strong move upwards, it has generally reached highs of over 5x the previous peak.
- The 2013 Bull Run saw Bitcoin peaking at $1,200, about 6x higher than the previous 2013 peak of $200.
- The 2017 Bull Run saw Bitcoin peaking at $20,000, about 17x higher than the previous peak of $1,200. Along the way, the price head-faked a correction when the price reached around 2x, 4x, and 6x higher than $1,200.
As usual, it is impossible to predict price movements of public investments, especially in this case when there are no cash flow fundamentals to fall back on. But if this bull market looks anything like the previous ones, there should still be meaningful upside left and a 20-30% correction is par for the course. I’d start getting worried if this correction continues downwards to the $26,000 area, which would put it down around 35%.