Is Bitcoin’s bull run over?

By Juan Villaverde and Bruce Ng on January 11, 2021

Have you read the news today?

Bitcoin’s (BTC, Tech/Adoption Grade “A-”) price dropped significantly in the 24 hours leading up to the open of old-school financial markets.

Now, depending on who you ask, this is either the end of crypto or a great buying opportunity. We’re going to go with the latter.

BTC slid from about $41,000 on Sunday morning to the $33,000 neighborhood by Monday morning. That’s a decline of approximately 20%. After weeks and weeks of nothing but new all-time highs, a lot of analysts had been calling for a pullback, and it seems they’ve had their prognostications fulfilled.

Good for them. But good for us too — especially those of you who haven’t yet begun to participate in crypto markets. This — as they say — might be the opportunity you’ve been looking for …

As we noted on Dec. 18, “Don’t be surprised if we see a small correction soon, as our timing model suggests we may see a brief pullback before the long-term crypto bull-market resumes.”

Our timing could have been better. But this is a move that we saw coming.

On that note, let’s put this price pullback into context:

As Messari so eloquently put it, even though Bitcoin has dropped around $8,000 from its all-time high, we were trading at these levels just six days ago. Bitcoin’s been gaining so quickly lately that it’s easy to lose perspective.

That happens during these types of bull runs — the old school would say “irrational exuberance.”

And with huge price gains come sharp pullbacks. That’s the story with crypto; big moves come with exploration of all new territory.

At the same time, the cryptocurrency market is maturing. That’s why we’re calm today. Let’s take a look at some fundamental metrics for Bitcoin …

Higher hash rate and difficulty means higher processing power of the Bitcoin network, as well as even greater network security.

That means that, even though we’re seeing a small correction in the market, the strength and security of the Bitcoin network are at all-time highs.

Don’t forget that this entire Bitcoin bull action is built on top of massive value in a network that continues to grow stronger and more sound over time.

Bitcoin isn’t the only network advancing in strength and functionality, either, as the Ethereum 2.0 launch has started and will only continue to grow and add functionality over time.

Let’s close out on an interesting piece of investment news that means we might have an easier time filing crypto taxes in the near future …

Folks, markets correct. Right now, crypto markets correct dramatically. That doesn’t mean you have to get swept up in the emotion. Signs of maturity abound. And market capitalization for Bitcoin — and Ethereum (ETH, Tech/Adoption Grade “A”) — will rise with maturity.

Focus on the increasingly data-driven fundamental case that points to a much higher BTC from here over the long term.

Best,

Juan and Bruce

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