Even stubborn crypto investors are worried now. Bitcoin (Cryptography: BTC) It currently falls 18% from its all-time high of $109,000 in mid-January, trading at the $89,000 level on March 3rd. A few months ago, when the election for a new Procrypt president was supposed to send Bitcoin to a new stratospheric high, the cave seemed unthinkable.
Is this the end of the classic “buy DIP” opportunity for Bitcoin, or the crypto bull market rally, as many investors and analysts have warned? It is helpful to consider three important factors to answer that question.
Analyzing Bitcoin’s historical record for over a decade reveals one thing quickly. A 25% reduction is almost standard for Bitcoin courses. For example, during the period from 2016 to 2018, Bitcoin skyrocketed to an all-time high, resulting in a slump of 38%, 38%, 33%, 38%, 36% and 29% along the way.
You’ve probably heard that Bitcoin is one of the most unstable assets in the world. Well, this is what I feel like about volatility. From a mathematical perspective, volatility is merely a statistical measure of how much Bitcoin can rise or fall within a given period of time. The higher the volatility, the higher or lower the price. This means that while Bitcoin can skyrocket prices, it could also collapse instead.
In 2023, Cathie Wood of Ark Invest analyzed the historic performance of Bitcoin over the past decade and found that there are five different periods with a total value draw of 77% or more. If you’re panicking now, imagine the panic you feel if Bitcoin has dropped 25% from an all-time high, if Bitcoin is down 77%.
But what do you know? Bitcoin collapsed at prices many times, but ultimately rebounded to reach a new all-time high. In 2024, Wood ran the numbers and determined that Bitcoin is always the best performing asset, no matter how long the time period over the past seven years.
As a result, the “buy” mantra has become extremely popular with Bitcoin investors. You’re essentially getting Bitcoin at a 25% discount before continuing the seemingly inevitable rise.
That may be why well-known investors continue to double Bitcoin, even if its prices drop. Michael Saylor, for example, bought another $2 billion worth of Bitcoin for his company, Strategy (formerly Micro Strategy). He also continues to predict that Bitcoin will eventually break past the $10 million mark at some point in the future, and will then rise by $49 million per digital coin.
The story continues
Despite this disastrous start to this year, Bitcoin is pretty much as good as other major cryptocurrencies. Bitcoin could drop by 14% per year, while Ethereum fell by 30% and Solana fell by 25%. More speculative cryptocurrencies (such as meme coins) have fallen in the 60% to 80% range. Bitcoin may not be the often-pictorial “safe shelter” asset, but it is much safer than most cryptocurrencies today.
The good news is that if you are a Bitcoin investor, it appears that large institutional investors are strengthening their exposure to Bitcoin. According to the latest 13F filing with the SEC, large institutional investors (people with assets under management of $100 million or more) have been exposed to Bitcoin in the past quarter. They are currently investing $38.7 billion in Bitcoin through the new Spot Bitcoin Exchange-Traded Funds (ETFs).
Image source: Getty Images.
This appears to be a long-term trend as more institutional investors warm up to the idea that Bitcoin is a standalone asset class with its own risk reward profile. The institution’s purchases are still in its early stages, according to investment company Bernstein.
Bitcoin can double its price this year if the institution continues to buy. Earlier in the year, Bernstein predicted that Bitcoin would reach a price of $200,000 in 2025. And at the end of February ( amidst the current market turmoil), we repeated price predictions, suggesting that now is the time to buy dip.
Bitcoin has historically been a very unstable asset, so the current period is not new. If the history is a guide, Bitcoin needs to be rebounded again. So, now might be another great opportunity to buy Bitcoin.
But it’s not easy and fun. Investing in Bitcoin is for long-term investors who are willing to be thick and thin, knowing that there can be a massive return in the long run.
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Dominic Basulto has a position in Bitcoin. Motley Fool has a position and recommends Bitcoin. Motley Fools have a disclosure policy.
Crypto Market Selling: Is it time to buy Bitcoin? Originally published by The Motley Fool
