Bitcoin surprised many with a steep pullback on price in September to $2,980. This caused panic in many, thinking it would go down and down, with no end in sight. It is easy to have confidence now that bitcoin is okay and doing well now that it is doing well.
Once bitcoin starts dropping, especially like it did in September, the cryptocurrency naysayers come out shouting that bitcoin is not a real currency. They talk about how volatile it is with no history. Yes, it does not have a long history but I say this potential pullback will further demonstrate the stability and legitimacy of bitcoin.
Many are saying this could be a healthy pullback and I agree. bitcoin went down around $5200 after jumping in price. Most everyone assumed it was a correction and that there was nothing to be worried about and it seems like they were right.
Once the price stayed fairly consistent through the 13th to the 17th (with a slight dip on the 15th) many assumed that was when a healthy pullback was due and they were able to predict it.
One writer at Coindesk was speculating a few days ago about a potential pullback with fairly good accuracy. But, of course, some investors were surprised but the drop (or maybe just annoyed) and one reason for it was other investors selling and taking their profits from the gains last week. After the dip bitcoin had a return of 10% in one day with a $98.5 billion market cap.
Even though some were surprised it is a very good sign for bitcoin that many were able to get a feel for what was going to happen with the price. This is making it a less of a lottery currency and more of a real and expected one. Because of this ability to get a feel for what bitcoin might do, this pullback should give us the confidence to predict what might happen with bitcoin in the near future using some of the things that predicted the pullback.
A number of institutions, companies, and respected investors interested in and investing their money in bitcoin is growing more and more every day. What does this mean? Well, the more respected bitcoin becomes the more people are going to value you and the more bitcoin will be worth. If we think back to the pullback people were thinking there had to be a correction because of people selling some of their bitcoin to reap the profits. It only makes sense for bitcoin to reach higher and higher prices because the coin is proving itself to be stable and safe.
The most curious thing though is the number at which bitcoin will truly level off. This is interesting because no one has a very good idea of it. Cryptocurrencies are still in their infancy and still gaining respect and proving themselves to be a need for an independent money system for the future.
There are so many articles saying this person says bitcoin is going to be worth $100,000 in only x number of years. Or bitcoin will be worth $10,000 in 5 years. But I argue that this number is almost completely made up. It is hard to find a system that accurately guesses what a completely new invention will be in 5 or so years. With that in mind, again, we are not completely clueless about investing, currency, and price analysis, the kind of stuff we can actually study today.
What I am getting at is this combination of knowing how the price may go short-term and not knowing how high it can go is a beautiful combination for investors. Specifically, let us look at the pullback that just happened. This price pullback of bitcoin just very recently gives us security that bitcoin can be tame, usually. It is not an unpredictable monster going totally up and totally down from day to day. I’m aware not everyone predicted the pullback but this is not science. Going back and studying it makes it so we know it acts like a “normal” investment so we can have that hope with the future.
Combine the normalness of bitcoin and the 100% true fact that several new companies and organizations are accepting bitcoin every day makes it that much more stable and valuable.
One other reason why bitcoin is going to be just fine is the need and efficiency for a global currency. Exchanging currencies is not hard but it is a pain and if there was a solution to not have to deal with that, it would make things that much more easy. Once bitcoin has become popular enough where it is the normal thing to buy things with there could be unforeseen indicators for price drops, like people switching to different cryptocurrencies, countries banning or trying to ban bitcoin, or it being too expensive.
But with bitcoin at the forefront of cryptocurrency, there is no change in sight for bitcoin to lose the lead. If it does, it will almost for sure happen slowly, thus letting people become aware that the price might drop soon. With the China scare recently about bitcoin people thought it may lose its value totally, but, of course, that did not happen. Though, it could happen in the future with countries trying to ban it. All of this said to try to represent the argument for the movement of the price of bitcoin seems to be transparent at this point in time. When pullbacks happen, people are going to buy because it is cheaper. When the price rises dramatically people are going to sell and get their profits. This type of thing is happening with a backdrop of extreme positivity surround bitcoin. There is a charge of energy that seems to make people want to invest in this weird “new” thing that might be changing the world right before our eyes. This kind of positive energy does not seem to be a fad but a trend with bitcoin. So, you should be able to be fairly positive that pullbacks will come but they will shoot up again.