Did you see the CNN headline?
“Bitcoin plunges more than 20% in three days. It’s now in a bear market“
Chalk it up to an editor mistaking “bear” for “bull.”
At least I hope so. People have started shouting “bull market” for only the past few months, but the truth is bitcoin’s been in a bull market for two years.
Some things never change
For almost all of 2020, I heard people talk about the bitcoin bear market.
In January 2019, bitcoin’s price was $3,200. In January 2020, its price was $7,347. In January 2021, as of the day I wrote this, its price is $34,000.
Does that sound like a bear market?
Now, one dip and the whole thing’s coming to an end?
This “crash” didn’t even break bitcoin’s parabolic uptrend. Look at the blue line, a projection of bitcoin’s price based on the past three months’ rise:
Still on pace to hit $100,000 in mid-February.
We could drop another 30% from today’s price and still match a typical bitcoin crash. That would mark a 40% drop from the recent peak of $41,000 and blend in with the price chart.
Check out all the times bitcoin crashed 40% or more:
Since the crash of 2018, bitcoin’s price has fallen 40% or more four times—usually, on the way UP.
What about an even bigger crash? Definitely possible. Look at the 50% drops:
Volatility does not mean doom
That massive 2018 crash still lingers in people’s minds. These smaller, more recent drops only serve to reinforce the fear of another, bigger one.
Could bitcoin go into another bear market now?
Sure. All bull markets end eventually.
A 25% drop will hardly end it. From today’s price, bitcoin’s price could drop 50% and remain in a healthy, long-term uptrend.
And still people will not believe in this bull market. What will it take to convince them?
When it all falls down
The good thing is, whenever that bear market comes, another bull market will follow it.
And just like in early 2019, nobody except you and I will notice until bitcoin’s price has gone so high, so far that it’s too late to catch up.
Let’s not call for a bear market until we have some evidence. If you want that $1 million bitcoin everybody dreams about, you have to accept massive crashes along the way.
Some crashes are setbacks, others cause actual bear markets. We have had a setback, but that does not mean the bull market has ended.
Expect higher prices. And crashes. And, eventually, a bear market.
Just not yet.
Mark Helfman publishes the Crypto is Easy newsletter. He is also a top bitcoin writer on Medium and Hacker Noon. His books, Consensusland and Bitcoin or Bust: Wall Street’s Entry Into Cryptocurrency, explore the social, cultural, and business challenges of cryptocurrency. Learn more about him in his bio.
Originally published on Voice.com.