Bitcoin (BTC) has been through an extensive correction but it is not out of the woods yet. There are still plenty of analysts calling for a $3,000 bottom. In normal circumstances, the chances of that happening are negligible. If things remain as they are, there is no reason Bitcoin (BTC) might fall below $5,000. However, as we have seen in the past, it does not take much for things to change in this market. The last time we had a correction followed by another correction was back in 2014 when the Mt. Gox hack pushed Bitcoin (BTC) into a second correction of â59% for a period of 303 days. This means Bitcoin (BTC) had a total correction of â87.5% for a total period of 607 days.
The behavior of altcoins during this entire period of Bitcoin (BTC)âs second correction from September 2014 to July 2015 has been very interesting but before we discuss that, let us examines the nature of this correction in more detail. Bitcoin (BTC)âs second correction in 2014 was very Bitcoin (BTC) centric. This means that the correction had more to do with Bitcoin (BTC) than the market as a whole because the hackers got away with 850,000 Bitcoin (BTC) worth $450 million at that time. No altcoins were involved. The immediate reaction to this was a drop in altcoins as well but soon afterwards the altcoin market started to rise as the hack did not have anything to do with altcoins.
The above chart shows the price of Bitcoin (BTC) falling soon after the Mt. Gox hack. This event had devastating effects on the price of Bitcoin (BTC) because Bitcoin (BTC) were stolen from the largest exchange at that time. However, the rest of the market behaved a lot differently as a lot of new blockchain projects had already gone through corrections of â90% or more and were therefore ready for a trend reversal. This may seem like a onetime event but if we analyze the situation closely, we will come to the conclusion that we are at the exact same time in history today under the exact same circumstances.
The price of Bitcoin (BTC) risks a second correction and the nature of it appears to be Bitcoin (BTC) centric same as in 2014. As many of you are aware, the possibility of a Bitcoin ETF is what has recently pumped some life into Bitcoin (BTC) and saved it from falling more aggressively, in one go. However, the fate of Bitcoin ETFs is not known yet and any bad news might easily push Bitcoin (BTC) into a second correction. The whole situation is very Bitcoin (BTC) centric as a Bitcoin (BTC) ETF is only going to increase the price of Bitcoin (BTC) while altcoin projects will bleed as money will flow out of them into Bitcoin (BTC).Â Similarly, if a Bitcoin (BTC) ETF is rejected, the fallout will only affect Bitcoin (BTC) as the rest of the market has nothing to do (directly) with a Bitcoin ETF. Furthermore, most altcoins have already completed more than a â90% correction.
Now we come to the most interesting part of this analysis. The above chart for altcoins shows the exact same period during which the price of Bitcoin (BTC) declined back in 2014. As you can see on the chart above, altcoins rose to new all time highs while the price of Bitcoin (BTC) started to fall. In fact, Bitcoin (BTC) and altcoins followed opposite trajectories during the same period.
This is also how altcoins got to complete their cycles against Bitcoin (BTC). Most of the time, news and events are just catalysts to make happen what is supposed to happen according to the charts. If you check most charts for altcoins right now, you will see that most of them have reached the full extent of their correction against Bitcoin (BTC) and have now bottomed out. If Bitcoin (BTC) were to rise at the same pace as altcoins, that cycle would never get completed. Right now, we are at the exact same time where an extended correction in Bitcoin (BTC) and an altcoin rally is going to keep the market moving as usual. This is why Bitcoin (BTC) may fall further but the altcoin rally is just getting started.