All-Time High, Why The Drop?

Another day, another twist. Bitcoin touched $69k yesterday, dropped by 8%, and is currently at $63k.

Just when Bitcoin's peaked, the market served us a stark reminder of its volatility. As a decade-long observer of Bitcoin, I've witnessed these seismic shifts firsthand and you're not navigating these waters alone. What can history teach us about its sudden drops?

Let's Zoom Out

I explained in my 5th March report that price drops are common even in bull cycles. Only in hindsight can we say that a trend has reversed. I do not believe at all that it has. I am very bullish.

If this crash scared you, let it remind you that you must build your conviction of Bitcoin by learning more about it.

First, let's zoom out. Below is the price of Bitcoin since 2011.

Does this chart seem unfamiliar? It's because it's a log graph and not a linear graph. The price of Bitcoin on the Y axis increases in percentage and not in dollars.

Below is the graph that you are more used to seeing. A linear graph of Bitcoin's price.

Start using only the log graph instead of a linear graph of Bitcoin's price, as it far better reflects its volatility.

The two times Bitcoin crossed its previous all-time high, it immediately dipped before continuing its upward momentum. In 2020, Bitcoin crossed $19k, the all-time high of 2018, dipped immediately and then continued upward.

In 2016, Bitcoin crossed its previous high of $1,100, dipping and continuing upward.

Why am I Bullish

For all the reasons I have mentioned in my reports from the last two days. As soon as Bitcoin crosses a previous all-time high, there is some profit taking by long-term investors who painfully survived the bear market.

However, this is always a newsworthy event. Bitcoin was all over the news yesterday with the headlines: Bitcoin at new all-time highs.

FOMO sets in, and we go higher in the Greed zone.

Below is a 5-year graph of Bitcoin search volume on Google Trends.

The search volumes have started increasing. But they are nowhere close to previous highs.

Bitcoin ETFs

Bitcoin ETFs accumulated 8,800 Bitcoin on Monday, 4th March, and continue to stack Bitcoin at a record pace.

Glen Goodman has nicely summarised the whole situation of this drop in the video below.

Put on your seat belts, and see you in the next block.

Sandeep Goenka.

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