Bitcoin is down, but not dead

You probably won’t have missed it, the price of bitcoin has fallen sharply. Where you had to pay almost ?? 60,000 for a bitcoin last November, the price is around ?? 20,000 at the time of writing. Some bitcoiners don’t look at the price, others panic. Although it is difficult to estimate what the price of bitcoin will do, you can assume that the Bitcoin network will continue undisturbed with facilitating transactions and finding blocks. Bitcoin is down, but not dead.

Price falls

All financial markets are currently being hit hard. The price of bitcoin also fell significantly, and the prices of altcoins, also known as casino coins, even more.

Casinocoins are sold with false promises as ‘the next big thing’, which raises investor expectations.

That went well for a while. During a bull market, everyone feels like a genius investor. However, the reality turns out to be different: no less than 96% of all 12,922 cryptocurrencies have fallen in value by more than 99%. Many of these crypto projects will never recover due to problems with developers, lack of funding or simply because it was a scamcoin from day 1.

As with many casino coins that were popular in 2017, most will not recover after a drop of this caliber. A costly and painful lesson for many people who were tempted to invest anyway.

Volatility regularly leads to emotional and hasty decisions. When the price rises sharply, people suffer FOMO FOMO FOMO is an abbreviation that stands for: the Fear of Missing Out. It’s the feeling that you might miss the boat if you don’t act quickly. That feeling can arise when there are rapid price increases or as a result of news or events that are thought to have a lot of positive impact on the market. and greed plays a part. If the price moves in the other direction, as it is now, fear plays an important factor. That is why it is often recommended never to invest more than you are willing to lose completely and especially not to invest money that you need for something else. This prevents you from becoming too emotionally invested and vulnerable to price fluctuations. With modest amounts, it’s easier to stay calm and resist this kind of volatility.

Bitcoin vs casino coins

Bitcoin has also fallen in value, almost 70% from the all-time high of around 60 thousand euros. Does this mean that Bitcoin is also over? The future will tell, but looking at the history of the price, this is not the first crash Bitcoin has recovered from. It happened before in 2011, 2012, 2014, 2015, 2018, 2019, 2020 and now in 2022. See the chart below.

Bitcoin has often been called a failed project during these crashes, there is even a website that tracks how many times bitcoin has been declared dead. Unlike many other cryptocurrencies, which often never recovered after a one-off pump and dump , bitcoin’s price has always recovered.

One of the reasons why Bitcoin has survived is due to the high degree of decentralization of the Bitcoin network. Decentralized means that no central party or a small group of people determines the continued existence of Bitcoin. The opposite is the case, the Bitcoin network exists independently and on its own. The distribution of miners and nodes in the network is high, they are spread all over the world.

As long as there are at least two participants in the network, bitcoin will continue to exist. It is not a project of a group of investors or a commercial company, but an open protocol in which everyone can participate.

Altcoins are a different story. These coins come and go, benefiting from the hype surrounding bitcoin. They only rise when bitcoin rises, and fall when bitcoin falls. Bitcoin and ‘cryptos’ are wrongly lumped together. The resulting confusion is used by many altcoins to sell tokens with large-scale marketing campaigns with empty promises. Sometimes it is outright scam and the initiators sell their coins after a short rapid increase, leaving the other investors with worthless coins.

Many cryptocurrencies also claim to be technologically better or faster or to have more functionality than Bitcoin, but miss the mark. In most cases, so-called improvements come at the expense of decentralization and security, the two most important innovations at stake. It is therefore likely that they will soon be regulated as well.

Casinocoins often work on their own blockchain that is a lot less decentralized. Often there is a commercial company or a single developer team that is in control and with whom the entire project stands or falls. Altcoins are mainly used for speculation, they usually do not have real users or applications, which is why they are also called casino coins. Or even worse: shitcoins.

When the price of bitcoin falls and the hype dies down, these altcoins are forgotten. If the price of bitcoin recovers over time, there will be new altcoins again, again with great promises that have to persuade investors to get back in.

What now?

It can be painful to see the value of your portfolio fall. Especially if you have invested a lot and there is a lot at stake, panic can strike. It is then important to realize that the price of bitcoin says little about the actual developments in the sector. After all, the computing power in the network is higher than ever, there are an enormous number of active wallets, El Salvador and the Central African Republic have made the currency legal tender and they also seem unconcerned about this price drop.

If your portfolio consists mainly of altcoins, this might be a good time to take a closer look at Bitcoin. And why this is the only cryptocurrency that has recovered from the past crashes and continues to grow. Reading some books can help with this.

With the current price drop, it might be good to ask yourself: Do you believe that bitcoin will play a bigger role in the world in the future than it does now, or not? If the answer is yes, then a low price might be a good opportunity to buy. But remember, past results are no guarantee of future results – no one knows what the future will bring.

What we do know is that Bitcoin has been the only consistent factor for 13 years. It has the largest and most reliable network, the most users, the most developers, it is used by countries, banks and investment funds and almost everyone knows it by name. Billions have been invested in the sector. That doesn’t just disappear. The price is low, but Bitcoin is not dead – not by a long shot.

To avoid the stress of the price and volatility, many bitcoiners use the ‘dollar-cost average’ buying strategy. A bit of bitcoin is bought (automatically) daily, weekly or monthly regardless of the price. The first bitcoin company in the Netherlands, Bitonic, offers such a savings service with Bits.

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