Cycles, dips and bubbles. How to Read Bitcoin Behavior – News

Volatility, ie exchange rate fluctuations, usually moves in cycles. The market will be caught by investment euphoria or recession related to the level of depression. Even in worse times, however, there is no need to condemn digital assets.

In recent years, it has become clear that if an owner holds on to Bitcoin for at least five years, the chance of loss is close to zero. In addition, some analysts estimate a possible exchange rate of up to four million crowns for one bitcoin within a few years. Currently, the value is around 1.3 million crowns.

Bitcoin is very popular right now. At least that’s what the sentiments in the cryptocurrency market indicate. People trust it and its value rises. Among other things, this is influenced by the fact that the inflation of Bitcoin is very small and known in advance, since there are very few of these virtual coins in circulation.

In addition, it is decentralized and transactions through Bitcoin can be done worldwide, which tends to be the main argument of cryptocurrency fans.

However, this year is very special in terms of long-term trends for Bitcoin. It reached its peak value even before the halving – an event that happens after four years and when the reward for miners for producing a new block of Bitcoin is reduced by half. Due to the exceptional conditions since this spring, however, it is no longer easy for some of the familiar tours to be predictable.

The peak of the sinusoid between which Bitcoin mining oscillates is called bull and bear markets. This happens in four-year cycles, when there is a level of decline from the highest price. This year, however, the standard time changed a little. Bitcoin reached its highest recorded value, known as All-Time High (ATH), just before the halving, which has never happened historically.

“Cryptocurrency is entering the mainstream and we cannot accept that cycles will repeat themselves in the same way over and over again. The crypto industry is still very young and we can only anticipate by creating regulations,” said Anna Štrébl, CEO of the payment gateway Confirmo, on the current events in the world of cryptocurrencies.

He attributes the situation on the bitcoin market to the impact of ETFs, i.e. entering exchange traded funds, which simplified investment in cryptocurrencies, but also to the broader state of the global economy and geopolitics.

According to the financial director of SatoshiLabs, Štěpán Uherík, the fact that there was an increase in the price of bitcoin just before the halving was not so special. But ATH’s arrival is unusual. “The short-term growth in the price before and after the halving itself is nothing special and we have seen it again and again in history. What was remarkable was the performance of the ATH itself, which was apparently caused by the strong demand for Bitcoin with ETF funds. I believe this is the main reason, which of course brought about other factors – bitcoin was given more attention by the media, and interest in this cryptography and its purchase was shown by the public layman,” he said.

Roman Valihrach, CEO of Coinmate, sees the situation around cryptocurrencies in the same way: “There is a theory that this time is different at every circle. Last time, many people believed in the so-called super cycle, when, thanks to the participation of institutions, Bitcoin was not supposed to fall so fundamentally. This theory has been proven wrong, and many aggressive funds designed for growth have failed. ”

He said that the beginning of this cycle was very different from the previous ones. “Thanks to the optimism of ETF, we hit ATH before the half, that’s never happened before. So theories have begun to emerge that this cycle will accelerate, with some predicting a peak as early as the end of this year. What the truth will be, but no one knows. It is necessary to be prepared for all variations,” he advised.

According to Valihrach, we have been in a bull market phase since the end of last year, which has not yet reached the manic phase and is likely to last until the end of this year, possibly into the year before us But it is difficult to estimate the highest price that bitcoin will reach – as he says.

Uherík believes that the cycle could be unique and have more impact and diversification than the last one. More mass, the involvement of institutions, but also the uncertain geopolitical situation and many economic problems could contribute to the role of bitcoin as an asset in turbulent times. However, he says in one breath that this is still speculation and no one knows about the future.

According to Anna Štrébl, significant growth is generally expected next year. Historically, Bitcoin reached its peak after the halving. “If we are to expect the same development as before, we are currently in the accumulation phase before growth and new ATHs. Speculators estimate a possible exchange rate of up to $180,000 (more than four million crowns) for one bitcoin,” she said.

As he says, even the American elections can have a big impact on the development and growth of Bitcoin. During the Biden presidency, the US authorities were mostly very skeptical and strict about the digital currency industry. However, during the election campaign, Donald Trump began to focus on the American crypto community and sponsors from this industry with promises that the US would be a friendly ruler.

“Furthermore, Trump’s vice-presidential candidate JD Vance has been speaking positively about cryptocurrencies for a long time. If their platform wins and if the pre-election promises are fulfilled, it could have a big impact on the cryptocurrency market – the American market has a big influence on the global market,” said Shtrébl.

Therefore, according to experts, investors should expect that there will be cycles. In the long run, moreover, they should not try to eliminate them. According to Valihrach, the biggest risk is that people look at a historical chart and say, well, sure, I’ll buy at the bottom and sell at the top. But, as he says, the truth is much more complicated. Very few people hit the bottom and almost no one can hit the highest peak.

So he would recommend new investors to invest for the long term and not try to time the market too much. “With a five-year horizon, there is no one who will lose money holding Bitcoin.” However, there are many who tried to beat the market and ended up with huge losses,” he said.

According to him, the easiest way is to buy bitcoin regularly using the DCA method, average the purchase price and look at the digital asset through the lens of a long-term investment. “Bitcoin will either succeed and its price will go very high, or it will fail, people will lose interest in it and it will become worthless. I believe in the first option, which is why I look at it as a long-term investment. I’m not so much interested in what happens during the course,” Valihrach explained.

Uherík also has tips on how to approach buying bitcoin: “There is a saying in the bitcoin community: the best time to buy bitcoin was ten years ago, the second best is now,” he says. “If someone is an investor who is considering getting into Bitcoin, I would advise them to start wisely, with a smaller amount.” It also leads to a regular monthly savings form known by the acronym DCA.