Bitcoin and parabolic rises go hand in hand, and so do the revisions that follow. 80% corrections are not unusual for Bitcoin following the move we have seen since March, which has taken Bitcoin from $3,800 to $16,000.
History has shown us that massive rises result in massive corrections, so are we in for another dark crypto winter, or is there reason to think that brighter skies lie ahead?
Bitcoin’s Parabolic Tale
The most notable parabolic move Bitcoin has ever enjoyed was in 2017, when it hit all-time highs of $20,000 in December of that year. This was accompanied by an 82.5% correction that took two years to play out:
Records imply then that when Bitcoin experiences a parabolic move, a lengthy and almost total correction happens. These samples should truly have us afraid of what could be in store for Bitcoin, given that it has nearly particularly gone up since March, doubling from $3,800 to $16,00 without a vital correction. Catching such a pattern would see us fall back to $3,200 by February 2022, which is almost unbelievable given how far Bitcoin has come essentially since 2017 – approximately as unimaginable as thinking in December 2017 that Bitcoin would drop back to $3,120.
Reasons To Be Optimistic
Setting aside Bitcoin’s extended structural strength associated with prior years, there is another reason why things are different this time around – the timing. The 2013/14 and 2017 parabolic moves came at the end of lengthy bull markets, representing the peak of years of accumulation and upward price action. This explains the vast correction afterward.
We have two examples of times when Bitcoin went on a parabolic run and reacted far less aggressively. Before the November 2013 parabolic move above, Bitcoin enjoyed an initial parabolic run in April of that year:
While Bitcoin did experience a burst correction of 83%, it immediately bounced and shrugged off hints of a multi-year bear market by leading into the actual bull market just seven months later.
Likewise, in 2019 Bitcoin skyrocketed from its bear market bottom of $3,120 to $14,000 within six months, topping out in June. Once again, an 80% correction and the multi-year bear market failed to materialize, as the price only dropped 53% before resuming the uptrend (setting aside the black swan of the March crash):
The distinction appears to be when the parabolic run takes place within the cycle. Parabolic runs that have taken place quickly after a bear market structure was broken (April 2013 and 2019) have resulted in less competitive corrections and further upside afterward, while parabolic runs that have taken place at the end of multi-year bull markets (November 2013 and 2017) have resulted in 80% correction and lengthy bull markets.
Bitcoin only broke its two and a half year bear market in July, so we can be reasonably confident that this run to $16,000 is not the big one and that an 80% correction is not on the cards this time around. Even a 50% correction to $8,000 is an extreme consideration, all of which leaves us with a much more exciting prospect,
The actual bull market is yet to come.