While 2021 is widely considered a bullish year for the crypto market, Bitcoin has experienced 6 spikes in the last 8 months. Simply put, traders have faced huge liquidations and fears of trend reversal on the charts 6 times in the last 8 months.
In spikes, it is always difficult to gauge whether corrections will be long-term or instantaneous. However, these declines always have the same effect on market critics. Critics deny the credibility of the digital industry on the volatility argument.
However, most of these were instant fixes. They did not disrupt Bitcoin’s rally or on-chain metrics.
The chart above highlights all 8 flash crashes that occurred in 2021. Firstly, it can be observed that most of these dips occurred after a sustained bullish rally for Bitcoin. The first two big drops then led to a new high for Bitcoin. In Q2 2021, the spikes were more damaging as the price dropped below immediate support levels. Still, on the weekly timeframe, the asset continued to post positive ROI for the year. Moreover, this happened despite another flash crash that appeared in the market after 5 weeks of bullish rally.
What is mentioned here is that spikes look scary momentarily on daily or hourly charts, but do not change major trends in the long run. In 2017, market dynamics were more volatile, but in 2021 chaos is more calculated and controlled.
Sudden drops can have dramatic effects on price, but they do not weaken fundamentals of improvement, such as adoption rates.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.