Bitcoin (CCC:BTC-USD) is still the king of cryptocurrencies, but all is not well in the kingdom. Indeed, some investors are learning the hard way that the BTC price can go down as fast as it goes up.
Folks who’ve been in the crypto game for a while should be used to this by now.
Crashes of 50% or more are not uncommon in the world of cryptocurrency. You can’t expect these digital assets to behave like blue-chip stocks.
If you can handle the volatility, though, then the upside potential is powerful. Holding Bitcoin through the price pullbacks has, so far, been a profitable strategy eventually.
Still, your patience and resolve will be tested time and again.
That’s why it’s worthwhile to re-assess your crypto holdings and remember what motivated you to take a position in the first place.
Analyzing the Bitcoin Price
Bitcoin started off 2021 slightly below $30,000, but investors were about to embark on a roller-coaster ride.
The BTC price chopped around, but then launched towards $60,000 in February. Then there was more price volatility and a shakeout of the weak hands, followed by another big rally.
On April 13, Bitcoin topped out at $64,863.10. Thus, the price had actually doubled year-to-date.
I’ve said it before, and I’ll say it again. If you go chasing after vertical price moves, you could get severely punished.
Folks who bought BTC above $60,000 may have regretted it as the price tumbled during the next several months.
In July, Bitcoin briefly fell below $30,000 but then recovered to around $34,000. This could represent a terrific discount or a falling knife, depending upon your perspective.
If you feel that there’s a bargain here and you choose to buy or hold, then $60,000 would be a reasonable price target.
Historically, BTC has always surmounted the previous peaks, though it doesn’t always happen quickly.
It Starts with a “B”
My point, really, is that buying when others are capitulating is a viable investing strategy.
Yet, I fully acknowledge that this is easier said than done. So, to help keep you motivated, I’ll serve up a few positive-leaning news items for crypto holders.
Now that Elon Musk pretty much controls the cryptocurrency markets, at least we can say (for the moment) that he’s feeling positive about Bitcoin.
Musk spoke (virtually, not in person) at the B Word conference recently. This event was hosted by the Crypto Council for Innovation.
The “B” in “B Word” presumably stands for Bitcoin, and as you would imagine, the crypto markets followed the SpaceX founder’s every word.
Interestingly, Musk offered a warning about cryptocurrency mining’s environmental footprint.
“One thing you do need to watch out for with crypto, especially Bitcoin, using proof of work, using energy that’s a bit too much and not necessarily good for the environment,” Musk said.
All Pump, No Dump
No need to worry, crypto fans. Musk also provided some hope fuel for BTC holders.
“I might pump but I don’t dump,” Musk assured. Then he added, “I definitely do not believe in getting the price high and selling or anything like that. I would like to see Bitcoin succeed.”
So apparently, the mercurial Musk doesn’t plan to divest his BTC cache anytime soon.
And by the way, if Musk’s warning about cryptocurrency’s energy usage is bothering you, then perhaps an observation from Alexandra Clark, a sales trader at GlobalBlock, might assuage your concerns.
As Clark points out, Chinese regulators are helping/forcing cryptocurrency miners to operate more efficiently.
“China’s mining crackdown has drastically improved bitcoin’s environmental impact as miners have headed to the cheapest sources of energy on the planet, which more often than not are renewable,” she wrote, adding that older and inefficient crypto mining equipment has been removed or replaced.
The Bottom Line
The BTC price will flip and flop around. That’s how it goes in the world of cryptocurrency, as volatility is to be expected.
It’s up to you to decide whether the price pullbacks are buying opportunities or not.
But judging by Bitcoin’s history of pullbacks and comebacks – and in light of Musk’s current risk-on stance – a revisit of $60,000 looks to be inevitable.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
View more information: https://investorplace.com/2021/07/btc-is-headed-back-to-60000-with-or-without-you/