When Will Crypto Markets Finally Hit Rock Bottom?
Some practical advice for figuring out when you should start buying some crypto (again).
I don’t think it’s an overstatement to say that the current cryptocurrency market is an absolutely terrifying place right now.
There is genuinely nothing worse than seeing your hard earned cash (money that you worked very hard for) go down the drain as all your really clever investments go up in smoke.
I am probably down around 60% as I’m writing this and if I didn’t believe that bluechip coins/tokens like Bitcoin (BTC) and Ethereum (ETH) will live to see another day, I’d probably be shitting my pants right now.
The current market conditions can (understandably) leave many investors feeling dejected and too anxious to invest.
After all, it’s certainly not out of the realms of possibility that all our favourite cryptocurrencies can plummet further. However, we’re also unlikely to forgive ourselves if we do miss the opportunity to invest in all our favourite tokens at these heavily discounted price points.
Microstrategy’s Michael Saylor recently remarked that the 20-22k USD/BTC is an excellent entry point for investors, but I remember he said the same exact thing when Bitcoin was trading at 30k USD.
How do we find if we’ve hit rock bottom so that we are able to maximize the returns on the few dollars we have left?
Disclaimer: No one can predict what the bottom will be… especially during these turbulent times.
However, we can take notes from the 2018 crypto market crash and work from there:
Bitcoin is currently trading at around the 20-20k USD/BTC mark — around 70% down from its all time high (ATH) of 68k
In 2018, Bitcoin bottomed out at 82% down from its then ATH — if history is to repeat itself, an 82% decline from its ATH would see BTC trading at 12k USD/BTC sometime in 2022/2023
Alternatively, if you believe that the crypto markets have “matured” (lol) a little from their 2018 days, you may wish to look at the DotCom Bubble market crash for guidance — that crash saw tech stocks drops by as much as 78%, which would be equivalent to BTC trading at around 15k USD/BTC in 2022/2023
Personally, I’m more in favour of the more radical estimate of 12k USD/BTC due to the horrific economic conditions that we find ourselves in today. Bitcoin can literally drop down to 15k USD/BTC overnight amid some bad news from CryptoDotCom, UniSwap, Tether, or Binance. Moreover, the Federal Reserve’s resolve to combat inflation through tightening monetary policy doesn’t leave much room for optimism. Could it go as low as 10k?
We’ll see, I guess.
It’s also important to note that in 2018 it took around 12 months for Bitcoin to bottom out from its then ATH. If history were to repeat itself, we can expect to see the bottom of this cycle at around November 2022 (just a few months to go 🎉 🎉 🎉).
This should give crypto markets some breathing room and very mild price appreciation during 2023 before the next halving event sometime in 2024. Though, please remember that the price of Bitcoin tends to begin appreciating significantly around 6 months before the actual halving takes place in anticipation as investors pour back in expecting the next bull market.
Bottom Line: Don’t FOMO. You can probably wait a little longer, but if you can’t help yourself and you need to buy yourself some crypto right now, it probably won’t be the end of the world if you DCA all the way down to 15k… or 12k… or...