Home Finance Should you buy bitcoins if they fall below $15,000?

Should you buy bitcoins if they fall below $15,000?

426
0

Right now, $16,900 is a significant drop from a previous support level of $20,000 that bitcoin has maintained over the summer. So far, so good. As long as you buy it now, you’re still buying the dip. But now comes the big moment of truth: Do you buy if it falls below $15,000?

The worst case scenario for bitcoin

Until the FTX market contagion, $15,500 was supposed to be the worst case scenario for bitcoin. But then FTX happened, and now there’s a new worst-case scenario: $6,000. This would represent a huge 65% drop from current levels, and would inevitably drive more bears out of bitcoin. It would also lead to a final massive surrender and flight of investors, or a total market capitulation.

Previous bitcoin bear markets have required this panic before bitcoin could reach a final bottom. In short, there must be a pain point so intense in the crypto market that even the most stoic Bitcoin investor decides to wave the white flag. Most likely, the market needs one last final downward move to achieve total and complete capitulation. Only when Bitcoin hits a final bottom can we expect to see another long-term rally.

Read:  Billionaire says Britain may be forced to seek IMF bailout if it does not renegotiate Brexit deal

Buy the dip – and the double dip

The good thing about this is that bitcoin at $6,000 would still be double the 2018 bear market low. If you buy it at $6,000, then you would be setting yourself up for exciting potential price gains in the months ahead.

For example, consider the price projections of California-based crypto hedge fund Pantera Capital. It has set a price target of $149,000 for bitcoin, based on its expected performance around its next halving event, expected in 2024. According to this model, bitcoin will bottom out in late 2022, to be followed by a gradual recovery in 2023, before a huge acceleration in gains in 2024. Pantera Capital expects the crypto-currency to hit $36,000 in 2024 before skyrocketing to $149,000 thereafter.

Admittedly, that $149,000 projection is probably on the high end of what most investors are expecting. But even if bitcoin only retraces its path to $20,000, investors who buy that low could see incredible gains. That may not be very likely, but it’s certainly within the range of possibility; bitcoin was still trading near $20,000 in mid-June, after the initial market decline triggered by Terra Luna.

Read:  Popular dog-themed meme currencies, SHIB and Dogecoin, fell heavily over the week as the crypto winter continues

Millionaires of the bear market

There is a popular saying in crypto circles: “Bear markets are where millionaires are made.“This is when normal, everyday investors are able to pick up valuable crypto assets at rock bottom prices. Buying a bitcoin at $6,000 and patiently waiting for its price to rise to $149,000 is the type of investment that could make you a millionaire.

Yes, this is a very risky investment strategy, especially because of the cryptocurrency’s historical volatility. And, yes, you’ll have to buy and hold the stock in pain to make it work. The final capitulation of the bitcoin market will make your head and stomach turn. But when that day comes, when all your neighbors tell you you’re crazy for investing in bitcoin, that’s when the market will bottom out.

Total capitulation in the crypto-currency market sounds terrible, but it isn’t. It’s just a feature of the system. It removes all selling pressure from the market. All the risk-averse investors are replaced by risk-tolerant, risk-seeking investors, and the market has nowhere to go but up.