Why Bitcoin Dips Before A Halving Are Normal
Bitcoin started 2020 with a bang. It broke a hash rate record in January, and reached over $10K in February. However, it’s recently taken a dip, leaving some investors concerned. As Bitcoin races towards the halving, let’s take a look at why Bitcoin dips before a halving are normal.
Bitcoin’s sudden sell-off
Bitcoin is currently sitting at $5,883.50 (at the time of writing), a marked improvement from just over a week ago, when it dipped below $5K. Still, what is this dip attributed to? Many analysts believe that the sudden sell-off was due to global market panic, sparked by Covid-19 at oil cartel Opel’s inability to reach a supply cut - sending oil prices down to historic lows.
Tim Draper, the billionaire venture capitalist, recently moved most of his holdings to Bitcoin. "I have been out of the market for about six-months. It felt pretty lofty for me and I moved most of my stuff to Bitcoin and crypto," Draper told CNBC, adding that Bitcoin is "kind of a safe-haven now."
"I think Bitcoin in 2022 or the beginning of 2023 will hit $250,000 and that's a big move from where it is here," Draper said. "I think the reason there is that Bitcoin will be the currency of choice."
He’s right. Following the recent stock market sell-off, many investors have been migrating to Bitcoin - but that doesn’t explain the dip.
Dips before halvings are not uncommon
As Bitcoin prepares for the halving, PlusToken, a ponzi scheme in China and Korea, saw roughly $2 billion worth of Bitcoin and altcoins stolen from investors. Earlier this month, they moved over $1 billion worth of Bitcoin to mixers, which are designed to disguise the origin and destination of the cryptocurrency.
The following sell-off could have very likely contributed to the dip in Bitcoin’s price in March.
However, when we take a look at why Bitcoin dips before a halving are normal, it’s clear that we’ve overlooked something.
Historically, the focus has always been on the bull run that follows the halving (and for good reason), but the dip before it is of vital importance too. Now is the time to start accumulating Bitcoin, not running from it in fear.
With the halving around the corner, we’ll likely see a major bull run in the next few months, or even in 2021. The last halving in 2016 saw Bitcoin boom to a whopping $20,089 in December 2017, about 18 months later.
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Buy the dip
When we look at why Bitcoin dips before a halving are normal, it’s vital that we remember not to get caught up in everything. Bitcoin is almost acting like a safe haven from the traditional stock markets at this time of global economic turmoil, and soon the price will catch up. This dip is actually a way for investors to accumulate Bitcoin, rather than sell-off and run from it. The halving bull run is coming, and it’s much better to prepare now that risk buying at the top.