The bitcoin price has dropped from $19,530 to $15,150 within the past five days, since December 17. While analysts have attributed the recent decline to many factors, one major factor seems to be high transaction fees of bitcoin.
Analysts and experts have offered two explanations to justify the recent price decline and correction of bitcoin. Some analysts have claimed that the recent correction was triggered by a sudden increase in the price of bitcoin over the past month.
Since last month, within the past 30 days, the price of bitcoin has increased from $8,000 to $19,000. Even with the latest correction, the price of bitcoin has still recorded a 91.37 percent increase since November 22.
Within the past four years, Pantera Capital and its bitcoin hedge fund recorded a 25,004 percent return, nearly six-fold of the legendary Quantum Fund of billionaire investors Jim Rogers and George Soros.
For decades, Rogers and Soros were praised by the global finance market as legendary and once in a lifetime investors for recording a 4,600 percent return in 10 years. Pantera Capital’s bitcoin hedge fund recorded five times of that in merely four years.
Thus, as bitcoin expert Adam Back noted, the recent price drop of bitcoin can be considered as a major price correction resulted by the recent bull run.
“Buy the dip. people learn drama is meaningless, next time it’s market impact falls until it becomes background noise,” said Adam Back, quoting a statement from highly respected bitcoin and security expert Andreas Antonopoulos which read, “chill out everyone. Nothing of any substance has changed. Just a bunch of new drama, which you should ignore.”
Moreover, Litecoin founder and former Coinbase executive Charlie Lee emphasized last week after a bull run by Litecoin that a strong rally is almost always followed by a bear cycle. An abrupt decline in the price of leading cryptocurrencies such as bitcoin often lasts in short-term.