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Bitcoin bottom: In 2018?

2018-11-25, Michael Thompson

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Bitcoin bottom: In 2018?

At the time of this writing Bitcoin trades for about 3,700 USD. This is about 80% down from the peak in mid-December 2017. Analysts studying the charts will tell you there’s been a lot of panic selling recently. Many of those still holding are wondering how much longer this decline will last. While we can’t predict the time or price of the next bottom, we’ll take a brief look at Bitcoin’s history as one consideration.

Those unfamiliar with the longer history of Bitcoin may not realize that this year’s “big decline” is smaller than average (so far). In fact, the “longer term” bottoms have been about 85% below the preceding top, on average. Hence, historically speaking, it would be normal for Bitcoin to continue sliding down slightly below 3,000 USD (an 85% drop from the 19,400 USD peak).

On the other hand, the timing of this next long-term bottom is overdue, historically speaking. The long-term bottoms have historically come about a half year after the prior top. The longest decline was the 85% drop from Dec 2013 to mid-January 2015, about 13 months.

Overall, a reasonable guess from the historical viewpoint would be that we are nearing a bottom, anytime from today until next February. A low price between 2,700 and today’s 3,700 USD would be typical of the past. Of course, like any historical-based prediction, one must realize this is one of many angles to look at the problem. Many differences in the market today compared to the previous cycles (when Bitcoin had a much smaller market cap and was traded between a small population of “techies”) do serve to weaken this historical viewpoint significantly. We’ll include the usual expert’s advice here: do not buy Bitcoin unless you can accept a total loss of the investment.

Below are some of the historical Bitcoin falls referenced above.

  • 90% loss from early June 2011 to late November 2011 (over 5 months).
  • 70% loss from early April 2013 to early July 2013 (3 months).
  • 85% loss from early December 2013 to mid-January 2015 (over 1 year).

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