At almost exactly noon on November 10, 2021, Bitcoin reached an all-time high, trading at $68,778.48 per coin. The cryptocurrency community rejoiced, there were murmurs that the coin might hit $100,000 by the end of this year. A year-end Crypto party seemed in order, and in bullish mindset of many, nothing could go wrong.
At one point on December 4th, Bitcoin had lost approximately a third of its value, and the party was canceled. Cryptocurrency non-believers and “Bitcoin to Zero” pundits threw aside their canes and walkers, and danced with glee as best they were able. Bitcoin dropped to approximately $42,000 in a bearish move and much of the crypto market followed, fueled by fear of correction, SEC involvement in the digital currency arena, and a new COVID variant.
As of this writing, Bitcoin has recovered some of its losses, trading at just over $50,000. So, was this just a correction? Was early December the low point? Is it safe to get back in?
Please keep in mind that we are not market experts or financial advisors; these are just our opinions. As always, use your common sense, and don’t invest anything you can’t afford to lose. Cryptocurrency is an extremely volatile market. With that said, here are a few reasons we at MacguyverTech think this was a correction, and it’s safe to get back into Bitcoin as we approach the end of 2021:
1) We’ve seen this before: Between the Bitcoin halving of 2016 and the end of 2017, the coin price jumped from about $1,000 to $16,000, but there were also five corrections of more than 30% during that period mixed in. “What people are missing in the monthly, weekly, and even hourly swings of Bitcoin is the overall growth,” says MacguyverTech CEO Steve McKeon. “Corrections and selloffs are going to happen, but there are plenty of models that show where Bitcoin is headed as an investment. You’re not going to see the astronomical returns that you saw ten years ago, but profits of 500% to 1000% as we get closer to the next halving in 2024? That’s not out of the question, and that’s still a pretty remarkable return on investment.”
2) The bottom of this dip is being enforced – hard. One of the more interesting events of the past month in Bitcoin occurred very late on December 3rd into very early on December 4th. According to Coinbase, there was a huge sell-off of Bitcoin at 11:30 pm on December 3rd. BTC literally lost almost 20% of its value in a half hour, dropping from $52,000 to $42,000 in about the amount of time it takes to cook a frozen pizza. Almost instantly, the price bounced, trading at $48,000 by 1:00 am on December 4th.
What does that mean? It means that even in a market as volatile as crypto, there are plenty of people with common sense. It means that during that large sell-off in the wee hours of December 3rd, Bitcoin crashed through its speculative floor rather noisily, triggering a lot of buy orders. That lets us know where the “smart money” thought the absolute bottom of the correction was. Were they right? It might be too early to tell, but Bitcoin hasn’t dropped much below $47,000 since, and has stayed almost entirely above $50,000 for the past couple days.
3) Fear is an excellent short-term motivator, but a lousy long-term one. Markets get spooked easily, and fear-based momentum can drive a bearish market just as easily as speculation-based momentum can drive a bullish one.
But when the fear subsides, investors recognize opportunity. The correction has occurred. This morning, Pfizer announced that their booster shot helps against the Omicron Coronavirus variant. And the SEC, well, they’re still seeking legislation, but that’s not exactly new information.
So check the models, do your research, and proceed carefully. McKeon finished with one final thought. “We think this is the bottom of the correction, but even if it isn’t, it’s still a good buying opportunity long-term,” he said. “In the long-term, the only direction we see Bitcoin headed…is up.”