(January 5th) the Bitcoin price dropped by around $3,000, from $46/47k to $43/44k. This morning, BTC is hovering around $43,000.

Per usual, any time Bitcoin drops by ~5% in less than 48 hours and doesn’t quickly recover, people start talking about the Bitcoin Crash. It was trending on Twitter yesterday, and I read numerous articles about the price drop.

Whenever this happens, it seems like people are either:

1. Happy to see it because they’re convinced crypto is a scam or Ponzi scheme.

2. Fearful that they’re going to lose their life savings and Bitcoin will disappear into the abyss.

I haven’t been that involved in Bitcoin, and I don’t pretend to know everything about it. But, I’ve seen this situation before and I remember it clearly. Back in July 2021, I was helping with a crypto-related social media profile. That meant I was studying the Bitcoin price daily and reading every news article about crypto.

Remember what happened in July?

Bitcoin dropped to a deadly $29,000. It was all over. Bitcoin was declared dead on the spot. Thousands of investors had lost everything. If you bought BTC back in April when it was around $60,000 then you were double dead.

Might as well declare bankruptcy.

By Early September, Bitcoin returned back to $50,000+. All of the #BitcoinCrash and #BitcoinIsDead news seemed to be a false alarm.

I sort of understand the fear. Sort of.

Bitcoin was supposed to be at $100,000 by 2022 and it’s been going in the wrong direction. But I have to admit, I laugh a bit when I see BTC drop and #BitcoinCrash trending, again.

Here are a few — rational, in my opinion — thoughts I had about this situation:

Bitcoin will go back up

Bitcoin arose from the “crash” in July 2021 in less than two months, and it will go back up again.

You don’t need to do much research to find out that Bitcoin moves up and down, and some days are quite dramatic.

I’d invite you to zoom out a bit. The 24 hour or 7-day price charts might be scary, but have you looked at the 1-year or 5-year charts? Well, here they are:

Screenshots from Google

Bitcoin is +17% in the past year, and +5,099% in the past 5 years.

If you think Bitcoin has crashed, you need to zoom out a bit. Sure, it’s dropped significantly in the past 5–6 weeks, but I wouldn’t consider this a crash. An asset that’s worth more today than it was one year ago hasn’t crashed.

This account on Twitter quotes Warren Buffet saying:

“Out of our $49 billion, we haven’t moved any to Bitcoin.”
- Warren Buffet

Screenshot from Twitter

They seem to be suggesting that Bitcoin is a bad investment because Warren Buffet said so.

Warren Buffet has said he won’t invest in something he doesn’t understand. Obviously, he doesn’t understand Bitcoin, so he’s not going to invest in it. He also didn’t invest in Apple until a few years ago because he didn’t understand technology.

I agree with that. If you don’t understand something, I’d spend some time learning before investing.

If Warren Buffet invested 1% of his $49,000,000,000 in Bitcoin one year ago, he would have a measly profit of $43 million dollars if he sold it today, after the crash. Good thing he avoided that terrible loss.

Year after year, Bitcoin has continued to go up, and I see no real reason why that would stop now.

The only people who lost money are the ones who sold

I looked at the list of stocks I’m tracking yesterday and every single one was red. The same thing happened to all of the cryptocurrencies. They all lost value yesterday. But I didn’t lose any money.

I could’ve lost money if I decided to sell my assets, but I didn’t. I bought more.

If you owned 1 Bitcoin last week, then you still own 1 Bitcoin. It might be worth less today, but you haven’t realized any losses yet. Just like you wouldn’t make any money if your 1 Bitcoin was worth $100,000 unless you sold it.

Nothing really matters unless you decide to sell your assets.

Bitcoin will stabilize, but not yet

I read an article yesterday that said something like, “BTC will stabilize between $40,000 and $50,000, which could keep volatility low.”

Personally, I don’t believe that at all.

I don’t think Bitcoin will stabilize anytime soon, at least for a few more years. It just doesn’t make any sense. Right now, there’s still not that many people who own Bitcoin. And it’s still being mined.

I’m not going to predict when Bitcoin will stabilize, or at what price, but I will say I don’t think it’s going to happen for a few years, and it probably won’t be around $40–50k.

Eventually, Bitcoin will become somewhat stable, but I guess that depends on your definition of stable. I think we’ll see fewer days where the price drops or jumps 5–8%, but the price is always going to move up and down.

Even gold could be considered “unstable” depending on who you ask.

The price of gold dropped from $1,744 to $1,288 (-26%) from October 2012 to July 2013. To think that BTC is going to remain between $40–50k for months or years sounds a bit silly.

According to Glassnode data, there are about 33 million unique wallets that have some Bitcoin in them. And that number has been on a steady, rapid incline. That tells me that more people are buying Bitcoin, and that’s not going to slow down anytime soon.

Screenshot from Glassnode

The demand for Bitcoin will continue to rise, and 33 million out of billions of people is a tiny, tiny, group. Bitcoin won’t stabilize until it becomes more mainstream, and until more of it is mined and in circulation.

The latest Bitcoin crash doesn’t seem to be backed by any historical trends or signals other than the current price. I’d say that this too shall pass.