I have come to the conclusion that extreme price fluctuations in bull and bear markets Bitcoin are
it and accelerate its integration. The average user may not know that the bubble 2017 was not the only one, when the Bitcoin price soared, then plummeted. This market saw a lot of other bubbles.
- $1 -> $30 -> $2.30 (x 30 -92%) — 2011
- $2.30 -> $250 -> $62 (x 108 -75%)
- $62 -> $1,150 -> $154 (x 18 -86%) — 2013/2014
- $154 -> $780 -> $475 (x 5 -39%)
- $475 -> $19,700 -> ? 3,142 ? (x 41 -84%) — 2017/2018
As I have already noted, the integration of Bitcoin will continue owing to its strong volatility. Bull markets bring Bitcoin network effects, such as the development of technology (the market come new developers), inflows (ICE and Fidelity) and improved security (miners). Bearish markets, in turn, are forced out of the market anyone who does not understand the nature of Bitcoin and sells your coins to then regret it.
Thousands of market participants who understand that Bitcoin has a much greater capacity than any other form of expression is money, and accept the fact that the price will still not go through the cycle of development, have the status of holders in the last frontier. They will never sell their Bitcoin reserves to the full integration and buy Bitcoin when it seems they are relatively cheap.
Many believe that falling prices are negative for Bitcoin. I’m starting to realize that they are wrong. Moreover, the more price decreases in a bear market, the faster integration. If a whale decides to sell his million coins, the price may temporarily drop to 1 cent. It will be very bullish for Bitcoin, as investors for the long term will be able to very easily buy 1/21 th of all coins in the market. The fact that these Bitcoin in the future will not be sold with high probability, the market supply will decrease, creating a premise for the next bullish rally.
In a bear market the price will stop falling as soon as the proposal has finally become equal to the demand. During this period, the offer is too high for two reasons:
- The market presence of speculators, saprygova the market at the end of the last bullish rally that still do not understand the meaning of Bitcoin;
- Pressure from miners who mine coins and sell them to cover their electricity costs.
The demand is on the part of the holders of the last frontier. These people/company/government who understand its principles and are bears in the long term. We see that the number of holders in the last frontier grows as a bottom in bearish markets much higher.
Once supply and demand come into balance, price stabiliziruemost, weak hands stopped selling, and the price begins to rise. A key factor in this period is that with the growth of demand, the supply remains LOW. Thus, when the return of speculators and traders in the market, price again starts to grow very quickly.
This process happened for all the previous bubbles… the Shortage of coins leads to a lack of supply, which affects the growth rates, and this in turn attracts attention and triggers a new wave of integration, which is expressed in the influx of people who are learning the fundamental basics of Bitcoin and are adjacent to the holders of the last frontier. This cycle will continue to repeat itself until the full Bitcoin integration will not be achieved.