Bitcoin has seen the fifth largest hourly decline in history - what can we learn from it?
|Slavomír Kaňuk|source|1205x
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Bitcoin has seen the fifth largest hourly decline in history - what can we learn from it?

Although bitcoin has been on the scene for more than 10 years, it is still very young and underdeveloped compared to other assets. One of the clearest signs of the immaturity of this market is its extreme volatility, which has again been proven on February 19, 2020. It was on this day that we saw the fifth highest drop in value in bitcoin’s history.

According to Coinbase, the price dropped from $ 10,166 to $ 9,278 and thus by more than 8% in just one hour. It is one of the largest drops in value, with all major drops taking place in December 2017 (probably the most volatile period for cryptocurrencies in history).

However, this plunge can teach us more than just cryptocurrencies are volatile. The first and most important lesson learned is that no one has a crystal ball and can predict the future. Just a few hours before the bitcoin plummeted, a few merchants predicted via social media that it would never get under $ 10,000. They had no idea how wrong they were.

The second lesson is that the so-called "golden cross" is overestimated. It is a pattern that sees the 50-day and 200-day moving average cross paths, entailing an extremely bullish signal. However, as has been shown in this case, the hype around the "golden cross" was exaggerated and, in this case, also unfounded.

The last lesson learned is that the moment the world starts to pay attention to bitcoin, its price will start to work wonders – just like now. However, as soon as the media start to predict bitcoin’s growth, the price falls. Therefore, statements about cryptocurrencies from the media should always be taken with great caution, as in most cases they may turn out to be untrue.


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