Why is Bitcoin dropping?

That’s a billion dollar question.

I want to preface that this entire article is speculation and more of a psychology based piece than a TA post.

Reason #1

When Bitcoin hit 20k recently this was due to very little other than market manipulation, fear of missing out (FOMO), and media coverage on the large networks. Bitcoin went from something people had heard of to something people were running around like chickens with their heads cut off trying to attain. It turned into a “greater fool” scheme while bitcoin was red hot. This means that investors buy to sell soon after to someone else at a higher price until eventually this model is unsustainable and it busts. I should mention that I believe Bitcoin is a pioneering technology, but lacks substance to keep the new investor feeling secure while holding their investment as soon as it starts dropping in price.

Reason #2

At this point I believe that the market manipulators have sold off enough at premium prices that they are allowing the market to free fall and buy at a much lower price. Once this happens the price should settle and go sideways for some time. Until there is enough news and interest to create the next wave of movement upwards. (personally I do not think this is bad. As these cycles inevitably create more interest within the space and allows people to research more in depth and invest at lower prices. This is why I would never recommend investing during a hype cycle, as if you are unprepared emotionally you will have a hard time keeping in the game.)

Reason #3

These cycles have happened before and this is just another one of them. Price history below to better explain. With great growth brings new eyes. Once hype dies down prices adjust and slow growth happens after the “weak hands” have been shaken.

• Jun 2011 Bitcoin surged to $30 from about $1 than within months went down to $3.
• April 2013 Bitcoin went from about $30 to $230 then settled back down around $80
• December 2013 it went from $125 to $1000 and proceeded for the next year to decline to around $250
• In 2016 is when Bitcoin started to get some legitimacy through the spark of new block-chain innovation and we saw some steady growth for almost a solid year before things started to get crazy. However from $20,000 to (currently) low $7000s…

Bitcoin (and all crypto) have huge boom and bust cycles. If you cannot accept this than you will most likely lose money. Hopefully in the future the tech and business will be stable and the prices will not be so volatile, but we are not their yet.

reason #4

Because Bitcoin currently in the eyes of the investors isn’t worth its current price. Once it levels off and goes sideways for several months that is where the “support” is and we will be able to grow from there.

Please do not take this as investment advice. Do your own research and make your own decisions. Blindly investing is a sure way to lose money. Author holds a portfolio of crypto and due to this is bias.

Please like, share, and clap if you enjoyed this article. I love recieving comments and interacting with my readers.

Thanks,
JP