By Mary Ann Callahan

Ever since the crypto sector took a massive tumble at the beginning of 2018, we have seen numerous pundits calling it “the end of Bitcoin”. Others have insisted this was but a mild hiccup and the cryptocurrency would see a return in short order. With Bitcoin dropping lower, it is hard to tell what to forecast at this point. And for investors who are looking to maximize their return, the question becomes: Will the Bitcoin price be recovering any time soon, or should they be seeking alternative investment vehicles for the time being?

After the Crash

The crypto world is hardly homogeneous as there was a wide variety of reactions to the crash of Bitcoin. Some HODLers turned out to not have the conviction required, and others doubled down on their view. We figured out that many of the traders who were previously doing incredibly well were just benefiting from the glories of a bull market and didn’t really believe in the long-term potential of Bitcoin.

Basically, the crash served as a wake-up call for all the proselytizers in the industry. All the people shilling ICOs they didn’t believe in were left high and dry, and the industry went through something of a purge. This “purge” of sorts went a lot like the way the Dotcom bubble burst went in 2000s. But this hardly means it is the end of Bitcoin, just as the Dotcom crash didn’t mean that the Internet stocks would disappear.

What Happened Last Time

If we are going to predict the future, it might help to take a look at how the market performed when Bitcoin previously crashed. This has happened many times, but the most drastic crash ever occurred in late 2013 when the price collapsed from a high of $1,163 to $152.40 – representing a drop of 87%. This crash lasted 411 days, which probably had many investors thinking it would never come back.

But this isn’t the first time that industry professionals have referred to Bitcoin’s finale. All too often, Bitcoin is referred to as being “dead”. A large part of this can be attributed to the polarizing nature and risky perception of Bitcoin. There is even a special Bitcoin Obituary that details how many times (currently at 306) Bitcoin was declared dead and worth nothing.

As we know, all of these crashes (or “deaths”) have been followed by Bitcoin’s return where it would eventually hit another all-time high. By now we should be used to the fact that it is a volatile asset and the one that always seems to come back stronger the next time. Market corrections are common across all industries, but a world-changing investment like Bitcoin just happens to go through much more drastic ones.

Next Level Predictions

A common pattern is that investors with bull perspectives on the performance of Bitcoin are calling for massive increases in the price, even as it hits all-time lows. For example, Tom Lee predicts a price as high as $25k by the end of the year, and Robert Sluymer believes that Bitcoin has hit its bottom already and is about to reverse the trend.

Technical analysis is part of the bullishness of these investors, but there are also a lot of fundamental reasons why the cryptocurrency could be on its way to a new all-time high. One of the main reasons investors are predicting a recovery in the near future is the looming presence of large financial institutions who are gearing up to enter the industry. We have already seen Robin Hood aim to capitalize on the trading sector, but as more large institutions seek to take some of the market shares, many more investors and traders are expected to enter the industry. It also helps to see big funds like Andreessen Horowitz committing large amounts of money to the sector.

Additionally, many major governments, such as Thailand, the United States, and Japan are starting to provide more guidance relating to cryptocurrencies, and this should reduce a lot of the uncertainty regarding investing in them.

Another reason being offered for Bitcoin’s imminent recovery is the movement of the cost of mining a single Bitcoin. This cost has been increasing along with the level of difficulty required to mine a single coin, and it has served as a solid indicator of the price of Bitcoin. Miners have no incentive to mine coins for rates less than their costs of mining, so Bitcoin must once again rise in order to restore the economic requirements of the market.

Somewhere in the Middle

Strong opinions are fodder for those in the investment industry, and this goes double for anyone who chooses to speak about Bitcoin. This is due to its end goal of displacing the ever-present USD as the global currency. With a market capitalization of $115 billion and a price of $6,700 as of mid-July, there is a long way to go before it recovers to its all-time high of $19,783.

It seems like there are two points of view on the outlook for Bitcoin: it is either the future or already in the past. It is hard to reconcile the strong opinions on either side, but it is necessary to get a better idea of the life cycle of an industry. The Dotcom burst did occur in 2001, but many companies survived that crash to go on to do great things. With investors like Tim Draper calling for Bitcoin to hit $100k by the end of the year, and others like Nouriel Roubini saying it is a total sham, it is easy to let the uncertainty affect you. Things could be going either way, so the best decision every investor might make is to research as much as they can and never invest more than they are comfortable losing.

About the Author: Mary Ann Callahan

As an expert on Bitcoin-related topics, I’ve found myself as a Journalist at Cex.io – cryptocurrency exchange. I’m working on articles related to blockchain security, bitcoin purchase guides or bitcoin regulations in different countries.