Bitcoin Price’s Volatility Can Be Your Best Ally, or Your Greatest Enemy

Strategy exists to make this volatility your best ally.

Bitcoin price’s volatility is well known. I will even go a step further and say that Bitcoin price can be extremely volatile. I think it’s important to remember this because the recent sharp drop we’ve seen on the Bitcoin market is mainly due to new entrants.

Different analyses of the peak of transactions that we saw on March 12, 2020 clearly show that the majority of Bitcoins that were traded were sold by addresses that had been holding them for less than a year.

A majority of the people who sold their Bitcoins abruptly on March 12, 2020 had therefore probably bought them in the second half of 2019 when the price went above $10K.

These people who had bought Bitcoin above $10K made a sudden decision to capitulate when Bitcoin price dropped more than 50% on March 12, 2020.

Some even decided to sell their Bitcoins well below the market price as we saw at one point on Coinbase where the Bitcoin price spread with other platforms reached record highs.

While the average price of Bitcoin was still $4.4K on the other platforms, people in total panic sold their Bitcoins around $3.8K. All this shows that managing emotions is a key to making a winning investment.

This unfortunate episode is also there to remind us that the extreme volatility of Bitcoin price can be your best ally, but also your greatest enemy. In what follows, I will discuss with you the strategy to make this volatility your best ally.