Virtual Currency

The Bitcoin Crash Is Here… Now What?

There’s a tinge of panic in the air.

But we don’t panic here. We focus on facts and trends.

Yesterday, I outlined the trends – and opportunities – that currently exist in the broader markets.

But stocks aren’t the only asset class struggling to find the bottom.

Cryptocurrencies – led by Bitcoin – have been under fire as well.

The U.S. stock indexes may be in correction territory. But Bitcoin has lost half of its value since its peak on November 10, 2021.

So the question is, “What should crypto investors do now?”

Well, today I’m going to break down what lies ahead for the world’s largest cryptocurrency.

The “Halves” and the “Halves Not”

I’ve been covering and investing in Bitcoin for the better part of a decade.

And during that time, I’ve highlighted the biggest market mover for the digital asset: reward halving.

When a halving occurs, the reward for “mining” Bitcoin is cut in half. This takes place roughly every four years. And halvings are easy to remember because they happen in the same years as U.S. presidential elections.

A halving makes it harder to mine Bitcoin and reduces the availability of new supply, which triggers a big, parabolic move in the crypto’s price.

There were reward halvings in November 2012, July 2016 and May 2020. Each led to Bitcoin skyrocketing to new highs.

From November 28, 2012, to its peak on November 29, 2013, Bitcoin shot up 9,127%!

From July 9, 2016, to the digital currency’s peak on December 19, 2017, Bitcoin rose 2,778%.

And from May 11, 2020, to its peak on November 10, 2021, Bitcoin gained 686%.

Needless to say, these highs minted plenty of crypto millionaires.

But there are two sides to every trend.

Speculators race to pile into Bitcoin while claiming that it’s going to the moon. This euphoria clouds their expectations… and causes them to ignore historical trends.

This time is different!” they exclaim.

But gravity affects everything. And anything that flies higher eventually comes crashing back down to earth – including investments.

These moves downward are just as predictable as the rallies…

Which is why one of my forecasts for 2022 was that Bitcoin and other cryptocurrencies would crash.

Breaking Down the Crypto Meltdown

Newton’s third law of motion states that for every action, there is an equal and opposite reaction.

When we talk about moves in investments, every parabolic or impulsive move higher is followed by an inevitable drawdown.

Looking at a historical chart of Bitcoin’s returns, these pullbacks are clearly identifiable.

After hitting a high in November 2013, Bitcoin tumbled 84.8% by January 2015.

That was followed by a period of consolidation and a search for equilibrium before the next reward halving in July 2016. Of course, the crypto then stampeded to new highs.

After topping out in December 2017, Bitcoin crashed 83.8% by December 2018.

We then had a period of range-bound trading until the next reward halving in May 2020. From there, the crypto bull took charge until our last peak in November 2021.

Since then, Bitcoin has fallen as much as 51.7%, hitting a low of $33,184.06 yesterday.

That’s scared a lot of crypto investors.

But here’s the bad news…

It’s going to get worse.

Looking at the two most recent post-reward-halving declines – both of which saw Bitcoin drop more than 80% – we’re likely in store for a move even lower, to less than $15,000. That would keep us in line with previous trends.

But it’s not all catastrophic. There are some interesting shorter-term Bitcoin price trends that could prove quite profitable.

Heat Map Opportunity

If you purchased Bitcoin for less than $10,000, you’re likely still “HODLing,” or holding on for dear life.

If you bought Bitcoin when I first recommended it back in July 2016, you know we’ve seen these crests and troughs before.

Now, there are two possible courses of action.

Bitcoin investors can move to the sidelines and wait for the next reward halving in 2024. We know that buying on the day of a reward halving has continually delivered massive returns.

Or investors can prepare to act months before then, at post-reward-halving cycle lows.

For example, I’m not talking about buying Bitcoin on July 9, 2016. Instead, I’m talking about recognizing the opportunity it presented on January 14, 2015 – a year and a half earlier.

Likewise, I’m not talking about buying Bitcoin on May 11, 2020, but about moving into the digital asset as early as December 15, 2018.

In the past, this kind of foresight has increased returns by thousands of percent.

Of course, I don’t think we’re at our current post-reward-halving lows… at least not yet.

But there’s something else to consider…

Bitcoin has been around long enough to display some identifiable short-term trends. For instance, when we look at the monthly returns of Bitcoin since 2011, we see that a dip in January isn’t unusual.

It has had five big drops in January since 2015.

We also see that March, August and September have been bad months for Bitcoin as well.

But February, April and October are solid months for short-term gains.

Knowing this, we can swing in and out of Bitcoin and other cryptocurrencies. We can capitalize on month-to-month moves while we wait for new post-reward-halving cycle lows.

Bitcoin – like so many other assets – moves in predictable waves. That’s why I predicted new all-time highs in 2021 of nearly $75,000. And it’s why I forecast a crash this year.

Bitcoin will eventually top $100,000. But as I keep stressing, this won’t happen until 2024 or 2025. That gives you plenty of time to build a position.

Here’s to high returns,

Matthew

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