When Bitcoin Loses 20% in a Few Hours, Understanding Bitcoin Is Your Best Protection
Confidence in the Bitcoin revolution is the key.
|Sylvain Saurel||Feb 26||1||2|
After a festive weekend, the Bitcoin world has been rocking in fear for the past two days. Last week, Bitcoin reached a market cap of $1 trillion for the first time in its history. Where the fastest GAFAM had to wait 21 years for this, Bitcoin has achieved this feat in just 12 years.
This makes total sense because Bitcoin's potential is greater than that of any of the GAFAM. Bitcoin is a true monetary revolution that will change the world of the future.
As a result, the price of Bitcoin quickly skyrocketed to nearly $60K. Euphoria was the order of the day with extreme greed in the Bitcoin market. On Sunday, February 21, 2021, a new All-Time High (ATH) was reached at $58.3K.
A 20% pullback is nothing extraordinary for Bitcoin
Everything was looking good. And then, as is often the case with Bitcoin, a reversal took place. Within a few hours, the price of Bitcoin dropped dramatically to below $50K. A drop of almost 20% of its price occurred on February 22, 2021.
After a sharp rebound to $55K, the price of Bitcoin fell again on February 23, 2021, to a low of $45.2K. This $45K support was critical. It has held so far, allowing the price of Bitcoin to rise above $47K at the time of writing.
For the coming days, the most total uncertainty remains. It is still too early to know whether this correction is a logical consequence of the Bull Market we have been experiencing since October 2020, or whether the trend is being reversed. If this is the case, we could very well fall back below $40K very quickly.
Beware, we are still not in a Bear Market as CNN announced prematurely in January 2021 when the price of Bitcoin fell by 20% in three days.
March is generally a bloody month for Bitcoin
If February seems to be ending in the green, March will be the month of all dangers. March is a historically Bearish month for Bitcoin. Here are the performances of the Bitcoin price in March since 2011:
This may of course change in 2021, but things don’t seem to be moving in that direction. At best, March is a month of consolidation. In the worst case, massive corrections take place as in 2017, 2018, or 2020.
Historical data of this type are important because they give interesting indications of how cycles work.
You should therefore be prepared for March that could be shaky. There are several critical levels to watch for. The first support at $45K is to be held. If it does not resist, you should then look at the $42K area. Below that, we would go back below $40K with a major test around $37K.
Your best weapon is to really understand Bitcoin
When fear takes over the Bitcoin market, many people panic and sell their BTC at a loss. This happens constantly. These people allow their emotions to override their sense of logical reasoning. If you do this, you will never be able to make a winning investment in any market you invest in.
You have to learn to step back and see the bigger picture. You will then see that Bitcoin's long-term potential is not impacted by these 20-50% corrections. In the long run, Bitcoin remains your best weapon against the injustice of the current monetary and financial system.
Understanding this is the key to protecting yourself from these situations of high volatility. The more you understand Bitcoin, the greater your confidence in Bitcoin will be. It is this confidence that will help you stay calm.
Rather than fearing the current correction, and the bigger one that may be coming in March, you need to see what is ahead of you as an opportunity. Bitcoin is a game of accumulation for the years to come. In the coming weeks, you will be able to accumulate more BTC at prices that will seem cheap in a few years.
To take advantage of this opportunity, you need to have confidence in the Bitcoin revolution. Because at the end of the day, it's all about trust. Do you really trust the Bitcoin revolution? If so, you will face these corrections without fear. If not, you will panic and end up losing a lot of money.
If you believe in Bitcoin enough to do that, then you will be among the big winners for the rest of the year. Indeed, if March is always a difficult month for Bitcoin, then April, May, and June are historically green months. Again, no guarantees, just history that may once again rhyme.
It is up to you to study this history to take advantage of it, but also to deepen your knowledge of Bitcoin to increase your trust in its revolution.
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