In 2023, bitcoin is off to a fast start. If it falters, be prepared to purchase the decline. The crypto market experienced an amazing surge in January that appeared out of nowhere. Of course, Bitcoin has increased 37.57% in the last 30 days (BTC -3.20%). But it’s not just Bitcoin; almost all cryptocurrencies are up. Metaverse coins, entertainment coins, and meme currencies have seen some of the largest gains.
And precisely that is what worries us. Were we not just lamenting the possibility of increased inflation and a protracted decline a few weeks ago when we discussed “crypto winter”? We are always dubious whenever opinion changes this drastically overnight. Therefore, we are certain that the January crypto rise cannot continue. However, if you’re a Bitcoin user, that might be excellent news for you because “buying the dip” has worked well for Bitcoin buyers who employ a dollar-cost averaging approach.
Uncertainty regarding Bitcoin
Almost no one can concur on the best measure or indicator for determining Bitcoin’s future course. For instance, some long-term buyers evaluate the danger of the Federal Reserve strengthening monetary policy once more based on macroeconomic data. Others concentrate on well-known blockchain and cryptocurrency measures, such as the volume of Bitcoin entering and exiting the accounts of the richest investors, or “whales,” who hold the most of the cryptocurrency. As a result, there are essentially two factions when it comes to Bitcoin.
One group is the Bitcoin doubters, who consider the cryptocurrency to be in a “bull trap” at the moment. However, some people think that Bitcoin is on a rocket ship and will shortly hit $100,000. Discussions of Bitcoin frequently concentrate on the extremes, despite the fact that some purchasers fall somewhere in the middle or hold onto their Bitcoin for other reasons. To take advantage of the potential dip in the upcoming Bitcoin bull cycle, you can quickly and easily buy and trade cryptocurrencies by using a Web3 wallet with decentralized finance (DeFi) features.
The four-year patterns of Bitcoin
Long-term Bitcoin buyers are aware that the cryptocurrency typically moves in cycles of four years. There is undoubtedly a pattern, even though the scheduling is not ideal and there is some debate as to whether this pattern is growing weaker over time. In light of the Bitcoin collapses in 2014 and 2018, it is entirely reasonable to assume that 2022 will also witness a catastrophe. However, it also implies that there were surges in 2015 and 2019, and I believe that’s where we should look for solid hints as to what will happen to Bitcoin moving forward. Some experts claim that it is starting to resemble 2019. When the Fed ceased tightening in 2019, Bitcoin experienced a significant rise and increased by 247%.
Although previous performance cannot predict future performance, some dealers think that the way Bitcoin performed in 2019 may be a sign of what will happen in 2023. Naturally, a lot relies on the Fed, so pay attention to monetary policy if you’re going to track any measure or indicator. The four-year patterns of Bitcoin are not random occurrences. Since the first Bitcoin halving in 2012, Bitcoin does tend to operate in these four-year cycles as a result of the halving, an occurrence that takes place every four years. The amount of the prize for mining a Bitcoin block decreases by 50% with each halving, which alters the market’s characteristics.
This reduction may appear to be an obscure blockchain event, but it actually affects how investors view Bitcoin. Bitcoin’s worth tends to rise in the 16 months before each half. In reality, the California-based cryptocurrency hedge fund Pantera Capital modeled this occurrence and forecast that Bitcoin would gradually increase in price in 2023 before skyrocketing in value to $149,000 before the next halving, which is planned for April 2024. Naturally, prior achievement does not guarantee future success. Instead of trying to time the market based on historical data, investors should purchase and keep their investments for the long term.
Buy the dip
Due to its historical instability, Bitcoin rarely rises directly up. Because of this, we are absolutely certain that there will be at least one more decline before 2023 is over. The final Bitcoin bears will emerge during this decline. They have been sleeping through the entire crypto winter and are eagerly awaiting the opportunity to awaken and inform the investing community that “See, I told you that Bitcoin was going to collapse.”
The next “buy the dip” chance will appear at some point shortly. You will be ready if you are dollar-cost averaging. You won’t be gauging the market; instead, you’ll just be executing your long-term financial plan. This method of purchasing Bitcoin, as we’ve seen in the past, can be incredibly profitable for those prepared to hold onto their investment for a very long time.