If you invest in cryptocurrency, then this really is the ultimate question. What is the Bitcoin bottom? What will the low be for Bitcoin in 2022? Did we already see it or will prices go lower? Let’s dive into this.
Of course, there is no way to predict the future unless you have special powers that I don’t, or if you’re somehow capable of manipulating the market. Unfortunately for me that means I have no way of knowing what will happen next with cryptocurrency.
We saw Bitcoin hit an all-time high right around 69k, and recently we’ve seen it plunge to just over 17.5k. $17,567.45 to exact, which was a drop over 75%. Wow. Hope you weren’t buying in the 60s.
Did Bitcoin Bottom?
How does this look historically, and what should we expect from here on out? Did Bitcoin just bottom at 17.5k or is there more pain to go?
*** update, Bitcoin it a new low according to Coinmarketcap.com at $15,840.38 and wicked lower than 15.5k on 11/09/2022, and Bitcoin ended the year at 16.7k 🙂 ***
Before we get into all of this, I just want to remind you that none of this is financial advice, it is purely speculation and ultimately you need to do your own research and make your own decisions when it comes to investing.
That being said, let’s take a look into Bitcoin’s history, because this drop we’ve seen isn’t at all an anomaly. Bitcoin has been through a few bull-runs that then went into bear markets before where we’ve seen similar drops, however, Bitcoin ultimately ended up still hitting new all-time highs after.
And that’s what I want to focus on, is the previous cycles and what we can take away from that, if anything.
2013 Bull Run:
2017 Bull Run:
2021 Bull Run:
It’s important to note that ALL of these cycles basically hit all-time highs towards the end of the year around November/December of their cycles. Keep in mind the highs and lows I am mentioning likely don’t include any wick down or up, so the actual bottom/top might be slightly different than these numbers. It’s also important to note there was a 2011 bull run as well but I didn’t include that because it was basically Bitcoin taking off from nothing.
2013 Bull Run Summary
After the 2013 bull run it gradually dropped finally hitting lows around January 2015 (roughly 13 months later), then for the most part, it was pretty flat and boring until it started to take off again around October 2015 which was about 9 months after the low after that bull run. At that point it steadily moved upwards until it went nuts in 2017. $1151.17 12/3/2013 was the high, $178.10 1/13/2015 was the low after (via coinmarketcap). This equates to an 84.5% drop before heading back up.
The overall gains during it’s bull market depend on what time frame you’re looking at, however the low after the 2011 bull run from what I found was $2.14 11/18/2011 so from that to the top of the 2013 bull market would be roughly a 537x on your money…nice. But if we simply just look at the low closer to the bull run then a good time frame for that is July 4, 2013 where it dropped to $68.43 and this is roughly a 16.8x on your money.
2017 Bull Run Summary
As for 2017, it hit it’s high of $19,497.40 12/15/2017 then didn’t hit it’s low until basically a year later, which was 12/13/2018 when it hit $3,242.48. This was an overall drop of 83.4%. Now, it started to go up at a decent rate about 4 months later around later March 2019, however, it went mostly flat after that until October 2020. It is important to note that March 2020 it dropped at a high rate due to the pandemic.
So to kind of sum this up, it basically 2-3x’d after it’s first run 4 months later and hovered there for a couple of years before going off…and maybe the next bull market would have been sooner if it wasn’t for the pandemic (or not?).
Overall, from the drop after the 2013 bull run to it’s low of $178.10 prior to the top of the 2017 bull market the overall gains were basically a 109x on your money, but if we look closer to the run where Bitcoin dropped, a good time to pull from is 7/15/2017 as that was a nice drop just before the bull run when it hit $1,929.82. From that point to the top it was a clean 10x on your money.
2020/2021 Bull Run Summary
Here we are in 2022. Now, as I mentioned above, the high according to Coinbase was $69,000, and the low of $17,567.45. However, to keep it consistent, I’m going to use numbers from coinmarketcap that basically doesn’t include the quick wick down.
They show a high of $67,566.83 on 11/7/2021 and then the low of $19,017.64 on 6/17/2022. So assuming this was the low, then that would put us about 7 months later, and an overall drop of 71.8%. Before I mentioned it was over 75%, but again that’s showing a quick wick up/down on both ends.
But using the same metrics via coinmarketcap, we get 71.8%. While the previous bull runs have shown drops of 84% and 83%.
Ok, so if history repeats itself and the same type of cycle continues, what would that mean?
That would mean we wouldn’t see the bottom until November or December of 2022, and as the 2013 was an 84% drop, and 2017 was 83%, assuming 2022 would be 82% then that would put the Bitcoin bottom at $12,162.03.
So there ya go, wait until November when it hits 12k and buy the bottom and get rich…if only it were that easy.
Of course, it doesn’t make sense to think that things won’t be different going forward as there are much higher market caps now and we didn’t see as high of a return as previous bull runs.
It’s also key to point out that on this last bull run it was much more spread out, the 2013/2017 runs mainly happened in just a few months while we saw the huge lift off to the top over about 14 months on this last bull run.
Overall, from the low after the 2017 bull run to the top in 2021 was a 20.8x on your money, and if we look at a drop point closer to the bull run, a good point for this was 3/15/2020 as it dropped to $5,014.48. From that point to the top it was a 13x on your money.
Things to Consider about Bitcoin’s 2022 Low
There are a couple of main things that stand out to me when I’m trying to really dial in on what to do next with cryptocurrency. Again, not financial advice, but if I’m just thinking out loud…and considering how to play this, here are my thoughts on this.
The main question I’m asking myself is if I think Bitcoin is dead, or if I think Bitcoin at some point in time will again reach a new all-time high.
The answer for me, is that it’s more likely than not that Bitcoin eventually hits a new all-time high. And that’s really the biggest question I’m looking at and why I personally feel like now is a good time to invest longterm in Bitcoin/crypto regardless if June 17th was the low or not.
We’ll get back to this in a bit. But first let’s look at other factors.
The next thing to consider, is that logically the longer Bitcoin survives and becomes more mainstream, we should likely start seeing less volatility. In other words, the swings shouldn’t be as drastic, but at the same time the gains won’t be what they previously were either.
Was a 71% drop all we’ll see. Well, it definitely could be, but who knows.
The next big thing to consider, is that the current macro-economic environment we’re in right now is pretty dire. In other words, if things start to pick up, then so could Bitcoin, but if things don’t. It could get ugly.
In fact, a lot of people think we could be seeing another 2009 like situation…if that were to happen, then Bitcoin has never been through that and who knows how low it could go then. Of course, that’s not just for Bitcoin, but all investments for that matter.
Anyways, these things are hard to predict. And that’s why you want to invest understanding your risk levels and your overall financial outlook.
But one very intriguing aspect as to why right now could be a good time to invest.
Capital Gains Tax-Does Buying Now Make Sense for a 2023-2025 Bull Run?
Now, again, we have no idea what happens in the future, and whether or not there will be another bull run. Personally, here are my thoughts. My thoughts are that it’s basically 50/50 as to whether we already saw the low, however, that’s it’s probably 80/20 that Bitcoin eventually hits a new all-time high.
So let’s play out this hypothetical situation. Again, not financial advice, but, let’s just play this out in our minds at what a bull run could look like. Ya know, if history repeats itself.
And let’s use stupidly simple numbers close to other bull runs. Bitcoin in 4/5 months hits a low of 15k around January 2023, then hovers for a year or so around 20k before hitting it’s next bull run. We probably shouldn’t expect a clean 10x, but more like a 5-7x or so. This mean Bitcoin at some point has a bull run that basically goes from 20k to 100-140k.
When do you want to buy?
Well, one thing to consider is capital gains tax. While the numbers are going to vary from person to person and their tax bracket, location, etc., let’s give some general ballpark figure numbers.
You’re going to be taxed around 15% for long term gains (over 1 year), while short-term gains (less than 1 year) will tax you around 30%.
So assuming history repeats itself and we see another bull run around 2024/2025 then right now makes sense to build a position.
Even if Bitcoin drops further to 12k..or even if the economy tanks and it goes back to 5k….if…and this is a big if, we see another bull run then dollar-cost-averaging right now to build a long-term position in cryptocurrency seems to make logical sense.
Summary
Look, the bottom line is that nobody knows fully what is going to happen next with Bitcoin and whether or not Bitcoin has hit it’s 2022 low yet. There are no guarantees with investing and there is always risk involved. The worst case is that you can lose all of your money, the best case is that Bitcoin is around and grows for the next several decades while we are able to take advantage of future bull runs.
The final breakdown with general numbers:
2013: Overall 537x, short term before the bull was a 16x only to follow with an 84.5% drop.
2017: Overall 109x, short term before the bull was a 10x only to follow with an 83.4% drop.
2020/2021: Overall 20x, short term before the bull was a 13x only to follow with the current 71.8% drop.
Further Drop: ? ? ?
Future Bull Run: ? ? ?
You decide.
What do you think? Has Bitcoin hit it’s 2022 low? Or will we see even further carnage ahead? Let me know in the comments below.