While Bitcoin enthusiasts panic over plummeting prices, history tells a different story. Bitwise CIO Matt Hougan has identified what he calls the “Dip Then Rip” pattern – Bitcoin’s uncanny habit of tanking during economic chaos only to rocket past previous highs once things settle down.
It’s like Bitcoin enjoys giving everyone heart attacks before making them rich. This isn’t just wishful thinking. Bitcoin has historically delivered average returns of 190% in the 12 months following major crashes. That’s not a typo.
When markets get jittery, Bitcoin gets hammered – about $900 billion just vanished from the crypto market. Ouch. But veteran investors aren’t sweating. They’ve seen this movie before.
What’s actually happening? Simple market psychology. When uncertainty spikes, Bitcoin suddenly looks scarier. This “discount factor” tanks the price temporarily. Everyone freaks out. Meanwhile, long-term price targets remain unchanged or even increase. The market’s invisible hand is just recalculating risk.
Technical indicators suggest Bitcoin might be oversold, with RSI Bollinger Band levels flashing similar patterns to 2013, 2016, and 2020 bottoms. The Market Value to Realized Value ratio points to a strong bottom zone. These indicators align with typical bull market indicators that usually precede sustained price increases across multiple cryptocurrencies. Analysts project potential floors between $68,000 and $74,000 in normal conditions – though a “Black Swan” event could push toward $50,000.
Institutional players aren’t running scared. BlackRock’s Digital Assets head actually sees a potential U.S. recession as a catalyst for Bitcoin. Senator Lummis reintroduced her Bitcoin Act Bill. There’s even talk of a strategic government Bitcoin reserve.
Bitwise remains bullish with a $1 million price target by 2029 and $200,000 by end-2025 if the Fed stimulates the economy. Despite recent tariff concerns negatively impacting Bitcoin’s value, the long-term outlook remains optimistic. The current shift from “Extreme Greed” to “Fear” in market sentiment? Probably just another pit stop on Bitcoin’s wild ride. The decline in discount factor from 85% to 75% is a promising signal that recovery may be on the horizon.
History suggests those with strong stomachs might be laughing all the way to the bank.
