After the run-up cryptocurrencies have had this year, it would have been alarming if we didn’t have a major pullback.
This is a normal correction (in the crypto world). This time, the fear seems to be based around bitcoin’s high transaction fees.
But in reality, this is just a necessary correction after an incredible run-up.
For perspective’s sake, let’s recall that one month ago, bitcoin was trading at $8,171. Ethereum was trading at $365.
Even after the pullback today, bitcoin is north of $13,000, and Ethereum is trading at $644 (as I write this).
I’ve posted this chart before, but it’s worth reviewing today. It shows that bitcoin crashes roughly once per quarter.
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This is why it’s so hard for many people to hold crypto for extended periods of time. Dips and corrections like this happen regularly.
It may seem like the end of the crypto world. It’s not. I’ve been on this wild ride since 2013, and I’ve watched as bitcoin has been declared dead on at least 144 occasions.
If a month ago you planned to hold your crypto for years, this should not change that.
Some of the smartest people in the world are working on lowering bitcoin’s high transaction fees. Exchanges such as Coinbase still need to implement Segwit (a “soft fork” upgrade), which will lower fees and improve efficiency.
The “core” developers of bitcoin move cautiously, and for good reason. They know that a single mistake could ruin the reputation of the coin. So they extensively test and review every upgrade and change to the network. That takes time.
Bitcoin Cash is not the threat that the media is making it out to be. It has a handful of active developers, whereas bitcoin has hundreds of top-notch (volunteer) contributors, millions of owners and a far more decentralized network.
My advice: Hold or buy the dip if you haven’t gotten in yet. During volatile times such as these, members may want to “dollar cost average” into the market. In other words, buy at regular intervals (daily, weekly, monthly).
Have a great holiday season, everyone.
Adam