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Bitcoin’s Price Drop is an Opportunity for Long-Term Investors


On June 12, 2017, the price of bitcoin inched close to the $3,000 mark for the first time in the history of the digital currency. Following this new all-time high, the price of bitcoin tumbled to reach its one-month low of $2,264 on June 15, which constituted a 24 percent drop in price in only three days.

Bitcoin skeptics took this as a clear sign that the “bitcoin bubble” they proclaimed existed has come to an end and that investors should stay away from bitcoin and digital currencies altogether from now on. However, only a few days later, the price of bitcoin recovered to hit $2,750 on June 21, gaining almost $500 in value in less than a week after hitting its one-month low.

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The volatile price move we have witnessed in June follows a recognizable cycle in bitcoin’s price development. New all-time highs, especially at significant psychological price levels such as $100, $1,000, and now $3,000 have often led to sell-offs, most likely driven by profit taking from major bitcoin investors.

Nonetheless, bitcoin has always managed to reach new highs as the demand for the digital currency as an investment, an online payment system, and a means of making low-cost international money transfers, continues to increase around the globe.

Goldman Sach’s: Bitcoin projected to increase 50%

Goldman Sachs’ Head of Technical Strategy, Sheba Jafari, announced a price target of $3,915 for Bitcoin in a letter sent to its clients on Sunday.

Jafari wrote that even though Bitcoin is still in a corrective 4th wave, a fifth wave could take the cryptocurrency to record highs.

“From current levels, this has a minimum target that goes out to $3,212 (if equal to the length of wave I),” Jafari wrote. “There’s potential to extend as far as $3,915 (if 1.618 times the length of wave I).” Jafari did not list a timetable for the 4th or 5th wave.

Volatility is Normal for New Technology

For those of you old enough to remember the early days of the Internet, similarities can be drawn with the current evolution of bitcoin. Internet adoption was slow in the mid-nineties and even just having a computer in your household was somewhat of a luxury, let alone an Internet connection. At that time, many renowned public figures and so-called experts including American economist Paul Krugman, mathematician and Ethernet founder Robert Metcalfe, and astronomer Clifford Stroll stated that the Internet would fail. As we know today, they were wrong.

You can also draw comparisons between the evolution of bitcoin and leading tech companies that survived the Internet Bubble of the late nineties. An example of that would be Amazon, which has grown into the largest online merchant in the world despite humble and volatile beginnings as an online bookstore.

If you look at the share price of Amazon, you can see that in 1999 its price dropped by almost 50 percent from $105 to $55 in less than two months, just to rally back up to $106 six months later. Then in the year 2000, when the dotcom bubble burst, the stock price of Amazon crashed down to $15 to bottom out at $7 in mid-2001. Today, Amazon is worth $970 per share. This is because the business and the technology it uses has evolved into something bigger than people initially thought was possible.

The comparison between bitcoin and the Internet as well as leading tech stocks is an important lesson to keep in mind. It teaches us that new technologies take time to grow and evolve and during this time, skepticism, naysayers, and extreme volatility are part of that evolution.

Price Drops Can Be a Great Entry Point for Long-Term Investors

If you are considering making an investment in bitcoin as part of your retirement portfolio, then buying during market dips could turn out to be a profitable move as bitcoin has historically always recovered from price crashes within relatively short periods of time.

An example would be the recent dip in June when the price of bitcoin dropped almost 25 percent in a matter of days, just to rally by over 20 percent again in the following week.

If you are a long-term investor then buying bitcoin during dips is a good strategy to build a larger holding over a multi-month period or to even to make one large buy and hold trade.

Experts Predict Bright Future For Bitcoin Value

Bitcoin has been eulogized by the mass media on over 100 occasions since its inception. However, the price of bitcoin has always managed to recover to reach new highs as global bitcoin awareness and adoption continues to increase.

At the beginning of 2017, when bitcoin hit the $1,000 mark for the first time in three years, several bitcoin experts, including South African entrepreneur and bitcoin enthusiast Vinny Lingham, predicted that the value of the digital currency would reach $3,000 throughout the year. Given that it almost did three weeks ago, his prediction does not sound unlikely at this point in time.

Another price projection, comes from Kumar Gaurav, founder of remittance startup Cashaa, who believes that bitcoin has the potential to hit $10,000 per bitcoin should bitcoin’s current scaling challenges be resolved, while Bobby Lee, CEO of China’s first bitcoin exchange BTCC, predicts that the price of bitcoin will soon hit $11,000.

An even higher price prediction comes from Saxo Bank analyst Kay Van-Petersen who believes the price of bitcoin could reach $100,000 in ten years time should bitcoin reach 10 percent of the average daily volumes of the fiat currency trade.

If you believe that bitcoin adoption will continue to grow as it has done and that bitcoin experts’ predictions have merit, then any dip in the price of bitcoin would constitute a good buying opportunity for you.

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