Bitcoin analysis: price dips below 60,000 euros, but a 19% drop means nothing

At the time of writing, the Bitcoin price 59,450 euros, a good 19% lower than the price record of a few months ago. Time to put this decline into perspective.

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To fully understand this decline, it is helpful to look at Bitcoin’s historical price movements. In the graph below you see all price falls since the all-time high until a significant price increase.

Bitcoin fell more than 80%

In 2013, Bitcoin reached a new all-time high, but within weeks the price fell by as much as 82%. This was a huge blow to investors who were hoping for a new surge.

The following year, in 2014, Bitcoin again reached a new high, but the price fell again, this time by 70% in a few months. Although the price subsequently recovered, Bitcoin fell further within a year.

At the end of 2017, Bitcoin rose to $20,000 for the first time, but within a few weeks the price lost 70%. This pattern of sharp rises followed by deep falls became a hallmark of the Bitcoin market.

Two summits in 2021

In 2020 and 2021 we saw a special bull run with a so-called ‘double top’. After reaching an all-time high in March 2021, the price fell by 55% due to negative reports from China and Elon Musk’s announcement that Tesla would no longer accept Bitcoin payments.

The price then recovered and reached a new high in November, after which the price fell again by 51%.

Stay calm… or blindly panic!

The current price decline of 19% since the last high appears less severe compared to previous corrections.

This could mean two things: either the market has become less volatile or another bigger correction awaits. If the market is less volatile, this could indicate a more mature market that reacts less strongly to news and events. This could be positive for long-term investors as the sharp peaks and valleys would become less extreme.

On the other hand, the current decline could be a harbinger of a larger correction yet to come. Historically, Bitcoin has often experienced bigger declines after reaching a new all-time high.

In that case, it might be wise to keep some money on hand to take advantage of a possible ‘buy the dip’ situation.

And what if we compare Bitcoin with the other cryptos from the top 5?

Bitcoin then does extremely well! Even Tether’s stablecoin USDT is further away from its all-time high than Bitcoin.

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