Regression to the mean. That’s how lots of scientists prefer to explain things away. Nothing is extraordinary, it’s all just in the process of going back to mean values. Also, it’s the golden rule in market technical analysis: the value of every asset wants to go back to the mean, sooner or later. The question is, will that be true for Bitcoin as well? Let’s think about it a bit.
Bitcoin is at $3465 as we write this article which is a far cry from the $17,000 USD it reached on December 17th, 2017. It’s lost a lot of value to be sure and things don’t look any better now than they did a few weeks ago. But is it going to recover? A little at least? Will it reach new unsuspected heights at some point in the future. The answers are yes and yes.
First of all, this is not the first time in history that Bitcoin has plummeted in value. It’s gone down four times already in the past and it’s recovered every time, and it will do so again. When? Well, that’s what we’d like to know as well. Charles Hodgkinson (Cardano‘s leader and founder) is on the record saying that it will take about 10 years for crypto to get back to the level it had 13 months ago. We think he could be right, but it could be a much shorter waiting time. About two more years, according to some other cryptoanalysts.
But what about here and now? Well, things could get a tiny bit better soon. Many crypto investors expect that institutional money will come to the cryosphere and turn the market bullish sometime soon. Everybody is thinking about Wall Street for that, but New York bankers are not the only game in town. Just recently the Japanese corporation Rakuten bought a decentralized crypto exchange and it seems to be willing to put its money into Bitcoin. That could be the first of many institutional investors who take a risk in the cryptoverse and make the market recover.
And then, there’s the average thing. Every asset in the market (crypto, forex, commodities, stocks, options, or whatever you’d like to name) tends to go back to its average value sooner or later. That’s why moving averages are one of the signs that market technical analysts take more seriously when deciding whether to buy or sell anything. An let’s not forget something: over the last 10 years Bitcoin has been quite volatile, but it’s held its own better than the stock market and most fiat currencies in the world.
So what’s the average for Bitcoin? Over the last 200 days (a standard measure in the financial world) it’s been of $5,500. That’s quite higher than it’s right now, and that’s the value it should pursue and achieve over the next few weeks. Are we sure? No. It could not reach it in years. On the other hand, it could also go much higher too. The point is that Bitcoin is not lost at all. Yes, some people say it will reach zero. It’s not the first time such forecast is made, and it’s been wrong every time.
This is not the time to despair. The market is already doing that without your (or our) valuable help. It’s time to watch and learn, and see how Bitcoin and crypto come back.
[Image courtesy of Pixabay]
Disclaimer: All information provided through this article should not be regarded as investment advice, nor should be taken for granted for crypto trading purposes. Before making any investment or trading plans, make sure to inquire about the information diligently by carrying out your very own research. Thank you.