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With multiple Bitcoin hard forks, or splits of the Bitcoin blockchain into two, looming on the horizon, it’s easy to get caught up in the hysteria and be scared of what will happen to Bitcoin (and its price).
As with the prior split of Bitcoin into Bitcoin (BTC) and Bitcoin Cash (BCH), there are both proponents and opponents of the upcoming hard forks for Bitcoin Gold and SegWit2x. It’s easy to become confused as there are seemingly credible arguments on both sides, yet it’s clear that everyone has an agenda.
Thus, for those that are worried about what might happen to their investments, when should one sell his or her Bitcoin? Is now the time to get out before SHTF and Bitcoin crashes completely like the dotcom bubble of the late 90s/early 2000s? Or should we HODL? HODL is an acronym amongst crypto geeks for Hold On To Dear Life.
Long-term Trends in Bitcoin’s Price
If we look at this price chart from Coindesk and set the date filter to all – we can more or less see what Bitcoin prices have been since the beginning of its introduction (first block was mined in January 2009 but prices from then to mid-2010 were largely negligible).
Though there have been numerous dips in price, some harsher than others, the long-term trend over the past 7 years has remained the same: Bitcoin price is going up.
Examples of Short-Term Volatility: Mt. Gox
Mt. Gox was once the largest Bitcoin exchange in the world, handling over 70% of all transactions, and was even the place where yours truly first purchased Bitcoin many years ago.
In February 7, 2014, after almost 2 years of being the leading Bitcoin exchange, Mt. Gox halted all Bitcoin withdrawals, and after a series of press releases, statements, and resignation of Mt. Gox CEO Mark Karpelès from the board of the Bitcoin Foundation, Mt. Gox suspended all trading and went offline on February 24, 2014.
It was later revealed that the exchange had lost over 850,000 bitcoins, worth around $473 million at the time. To say that the news caused ripples would be an understatement: from the beginning of February 2014 to the end of March 2014, Bitcoin’s price declined by 36%. It wouldn’t be for nearly 3 years, until December 22, 2016, that Bitcoin recovered back to its price of about $853 per Bitcoin on February 1, 2014.
More Volatility: Bitfinex Hack
A couple of years after the trouble with Mt. Gox, Bitfinex, which replaced Mt. Gox as the world’s largest Bitcoin exchange, announced on August 2, 2016, that it had been hacked, losing 120,000 bitcoins, or about $72 million at the time, in the process. As with the Mt. Gox fiasco, Bitcoin’s price was affected negatively, with the cryptocurrency’s price immediately diving by 20%.
The price of Bitcoin recovered more quickly after the Bitfinex hack than it did after the Mt. Gox one, with Bitcoin’s price surpassing its August 1, 2016 price in mid-October.
How Many Times Can China Ban Bitcoin?
In early September 2017, China banned initial coin offerings (ICOs), and this ban had a huge effect on price, with Bitcoin going from a then all-time high (ATH) of nearly $5,000 per coin to a low of nearly $3,000 per coin. When (by some estimates) the world’s largest economy as well as largest Bitcoin miner makes a move, the world reacts.
Regardless, again, it’s easy to get caught up in the madness – China has banned Bitcoin several times, as this comical video explains. Some even argue that China makes these announcements to manipulate the Bitcoin price in their favor.
JP Morgan CEO Jamie Dimon’s Views on Bitcoin over Time (Superimposed on a Bitcoin Price Chart)
We’ll leave our readers with one more example of an “event” that has resulted in Bitcoin price volatility more than once.
JP Morgan CEO Jamie Dimon has been known for his negative statements on Bitcoin over the years, which have had a negative effect on price. This chart shows the effect of his negative statements, with one commenter jokingly remarking that we can use his negative statements to predict Bitcoin’s price. Some argue that Dimon is using his clout to affect the price in his favor. After all, behind the scenes, it seems as though he may actually like Bitcoin, or at least be interested in it.
Conclusion: Let’s HODL
It’s clear that Bitcoin has had its ups and downs, some of which have been directly correlated to negative news of events. Nevertheless, price has remained on a constant upward trend, which encourages us to hold onto our Bitcoin for the time being.
For many, especially those who haven’t been involved in cryptocurrency for long, it’s easy to miss the forest for the trees when seeing massive price swings in the span of minutes or hours, let alone days, months, or years.
However, history is not an event but a series of processes – the things that shape Bitcoin and its future have been going on subtly but continuously for years and will continue to do so. It’s only after the fact that we will remember all those processes cumulatively as a single “Bitcoin revolution”.
Thanks for reading!
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