Bitcoin recovery before Biden leaves office? What the data says

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Bitcoin and cryptocurrencies represent a new asset class.

Market data for Bitcoin, the oldest cryptography, dates back only to 2010 in many sources. This happened about two years after its development and long before knowledge of the asset was widespread.

Although the story is short, it was a bumpy ride investors.

Bitcoin investors embrace volatility and claim that “hold man on for dthe ear lwhen”. HODL seems like a source of comfort during a sharp market downturn.

HODL for Bitcoin recovery

The Dow Jones Industrial Average once fell more than 80% in its 126-year history. Bitcoin has delivered three drops of over 80% in just over a decade!

The graph below shows the time it took for Bitcoin to fall to a minimum of 80% and the time it took to recover to its previous highs.

Bitcoin Steady Recovery After 80% Drop.

There is good news in the chart.

The current decline began in November 2021. It could end this year if the slump is as long as the last two sell-offs.

Not all good news

There’s some bad news in the chart…

Bitcoin’s last two major recoveries took about three years. The first downturn was 80% recovered in less than two years.

If history repeats itself, Bitcoin could trade at new highs in 2023 or 2024. That means we could see a recovery while President Joe Biden is still in office.

But this is unlikely.

As public participation in the market increased, there were more traders with significant losses. They could sell during the recovery to limit losses, providing resistance as prices rise.

Another factor that could delay Bitcoin’s recovery is that crypto no longer seems plausible.

If it has no utility, it probably isn’t worth $60,000. It also costs zero, so some recovery is possible.

Result: I wouldn’t expect Bitcoin to reach new highs unless its supporters find a way to use their coins.


Michael Carrthere is editor a True Options Masters, One Trade, Peak speed traderandAccuracy of profit. He teaches technical analysis and quantitative technical analysis at the New York Institute of Finance. Follow him on Twitter@MichaelCarrGuru.

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