3 Popular Theories About Bitcoin That It’s Time to Forget About

There are a lot of theories on the crypto market, with the help of which investors are trying to explain the price dynamics of bitcoin (BTC) and predict the further movement of the main cryptocurrency. Some of them turned out to be quite accurate and justified themselves over the years – however, the current market cycle has made significant adjustments to the usual landscape, forcing crypto industry participants to reconsider their ideas about what is happening.

The editors of BeInCrypto have chosen 3 popular theories about bitcoin, which it’s time to forget about.

1. BTC price never falls below the previous cycle’s all-time high

Throughout the history of the existence of bitcoin, the price of the asset has never fallen below the historical maximum of the previous cycle. This theory held true during several previous bear markets, which is why many believed that BTC would never fall below the $20,000 mark again.

However, the lingering crypto winter has taken bitcoin into previously uncharted territory. Last June, the price of the main cryptocurrency for the first time dipped below the 2017 ATH of $20,000 amid a panic sale triggered by the collapse of the Terra ecosystem and the “zeroing” of LUNA and UST. And in November, it renewed cycle lows at $15,649 due to the collapse of the infamous FTX crypto exchange.

And although some market participants argue that without the intervention of “black swans” the theory would have remained true, the fact remains.

2. Bitcoin is the best hedge against inflation

Bitcoin is often referred to as “digital gold”, alluding to its store of value properties similar to physical gold. However, over the past few years, he has repeatedly led investors to doubt the veracity of this statement. The COVID-19 pandemic, and then the rise in inflation in the United States to 40-year highs, led to the fact that the main cryptocurrency lost about 70% in price and began to correlate with the stock market, in particular, with the technology companies sector.

However, the situation is slowly starting to change. The banking crisis, which led to the collapse of several large traditional financial institutions such as Silicon Valley Bank and Signature Bank, has again made Bitcoin attractive to investors, and the erosion of confidence in the dollar has led people to consider investing in a digital asset as a way to escape the fiat system. Thus, this theory can still regain viable status.

3. BTC will always move in four year cycles

Perhaps the most important misconception about bitcoin is that its price moves in four-year cycles from halving to halving and begins a parabolic rise about 6 months after it. So far, this has been the case. However, after the halving reduces emission to such a level that the reward of miners for mining BTC drops to almost zero, things can change significantly.

Another controversial point is that halving has become such a popular narrative that literally all participants in the crypto market are preparing for the upcoming event, scheduled for April-May 2024. This means that large investors will actively buy bitcoin in the hope of huge profits.

Any of these options can significantly affect the price of BTC and change the usual course of events. Therefore, even this stable theory will come to an end sooner or later.

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