Should you buy Bitcoin if it drops below $15,000?
The Bitcoin (CRYPTO: BTC) the bears are out in force. With the digital currency trading around $16,900, fears of more FTX contagion, recession, inflation, and geopolitical risk from China could push it past $15,000. Understandably, even the most diehard Bitcoin investors are worried right now.
Right now, $16,900 represents a significant pullback from the previous $20,000 support level that Bitcoin maintained during the summer. So far, so good. As long as you buy it now, you’re still buying the dip. But now comes the big moment of truth: do you buy if it drops below $15,000?
The worst case scenario for Bitcoin
Until the FTX market contagion, $15,500 was supposed to be the worst-case scenario for Bitcoin. But then came FTX, and now there’s a new worst-case scenario: $6,000. This would represent a whopping 65% drop from current levels and would inevitably bring out more Bitcoin bears. It would also lead to an eventual massive capitulation and exit of its investors, or total market capitulation.
Previous Bitcoin bear markets necessitated this panic before Bitcoin could reach a final low. In short, there must be such an intense pain point in the crypto market that even the most stoic Bitcoin investor decides to wave the white flag. Most likely, the market needs one last move down to get full and complete capitulation. Only when Bitcoin hits a final low can we expect to see another long-term rally.
Buy the dip – and the double dip
The silver lining in all of this is that Bitcoin at $6,000 would still be double the bear market low of 2018. Buying it at $6,000 would set you up for some potentially nice price gains in the months ahead. .
For example, consider the price projections of California-based crypto hedge fund Pantera Capital. He put a price target of $149,000 for Bitcoinbased on its expected performance around its next halving event, scheduled for 2024. According to this model, Bitcoin will bottom out by the end of 2022, to be followed by a gradual recovery in 2023, before a huge acceleration in gains by 2024 Pantera Capital forecasts the crypto to hit $36,000 by 2024 before skyrocketing to $149,000 thereafter.
Admittedly, this price projection of $149,000 is likely at the high end of what most investors expect. But even if Bitcoin only retraces its way back to $20,000, investors buying this bottom would be looking at incredible gains. It may not be highly probable, but it is certainly within the range of possibilities; Bitcoin was still trading near $20,000 in mid-June after the first market downturn triggered by moon earth (CRYPTO: LUNA).
Bear Market Millionaires
There is a popular saying in crypto circles: “Bear markets are where millionaires are created.” This is when normal, everyday investors are able to nab valuable crypto assets at bargain prices. Buying Bitcoin at $6,000 and patiently waiting for it to appreciate to $149,000 is the type of investment move that could make you a millionaire.
Yes, this is a very risky investment strategy, especially given the historical volatility of crypto. And, yes, you will have to buy and endure real pain for it to work. The final market capitulation for Bitcoin will be dizzying and life-changing. But when that day comes – when every one of your neighbors says you’re crazy for investing in Bitcoin – that’s when the market will bottom out.
Complete capitulation in the crypto market sounds terrible, except it is not. It’s just a feature of the system. This helps remove any selling pressure from the market. All risk-averse investors are replaced by risk-tolerant and risk-seeking investors, and the market has no choice but to go up. This is why I remain bullish for the long term on Bitcoin. I buy the dip — and I mostly buy the double dip when it drops below $15,000.
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Dominique Basulto has positions in Bitcoin. The Motley Fool has positions and recommends Bitcoin. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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