We’ve seen the FUD (fear uncertainty doubt) runs rife when Bitcoin prices take a hit, regularly spreading panic beyond the short-term investors into the wider community. Admittedly I used to get cold feet when my investment took a dip but as my interest spread beyond financial reasons I began to identify with the political and philosophical principle behind cryptocurrency. Recent minor highs and lows of the last few months have not concerned me. Bitcoin isn’t ever going to incur blanket adoption and it is delusional to think it will replace all currencies and commodities used in exchange. But I do think it will grow into a prominent alternative for those who can benefit from the positives it offers. It is predictable that online businesses will be the biggest area of growth for bitcoin due to its intrinsically digital nature which merges it perfectly with that industry. This promise of growth gives me faith for the future despite short-term downturns on my cryptocurrency savings that I feel are much safer in Bitcoin then in inflationary fiat currency.
Overall since March this year the price has usually been between $650 USD and $400 USD. Once again however I don’t plan to cash out my Bitcoin anytime soon, rather use it for secure long-term savings or purchases in its digital form. Those who want to gamble on volatility will have better luck with a burgeoning altcoin, so maybe you should reconsider your investment strategy if this degree of change in Bitcoin value will keep you up at night.
FUD is a repeating cycle
We have had the same story several times now:
- Price Drops – For reasons legitimate or not the price drops. Sometimes this happens due to bad news, regularly it is just a spontaneous increase in selling.
- Denial – Community members and investors acknowledge the price drop but resist panic in the hopes of a quick rebound.
- Panic – Get-rich-quick investors and evangelists who can’t put their money where their mouth is panic. Some sell (leading to further decline) others hold while encouraging others to follow suit, aggressively peddling blames as to why the price drop happened (merchants using processors, hoarders ect.). Usually this is grasping at straws as the drop likely occurred due to a whale or early investor cashing out
- Denial – It is almost as if the price drop never happened to those who didn’t sell on the way down, the panic morphs into delusion and posts to the tune of “Why the price drop is actually good” start to appear
- Stability – Price remains stable at the lower level and the community usually gets back to something productive for the duration
- Rebound – logically or not another bubble (spike?) eventually is formed.
It amazes me how investors/enthusiasts fail to recognise this repeating cycle. You can’t blame anyone for a drop in value, nobody is in charge in Bitcoin by it’s very principle. If a whale or early investor decides to cash out and the price takes a hit as a result this is simply the cost of the free market that the anarcho-capitalist philosophy behind cryptocurrency calls for and that Bitcoin evangelists regard so highly. One week the community praises merchants for accepting Bitcoin, the next they are the devil beacause they immediately cash out for fiat. If Bitcoin is to grow the core members of the community need to be less fickle when it comes to price fluctuations.