Another 50% Bitcoin price correction, "Where to from here?" My best guess is...

Here we are, in the middle (or is it? more on that later) of a 6th Bitcoin price correction of 50% or more since 2012. The excellent graphic below from Visual Capitalist shows all of the major Bitcoin price falls over the past 10 years.

The question that I get more often than any other is this: "Where to from here?" Obviously it's anyone's guess as to what will happen to the BTC price over the short term. Nobody knows (aside from the possible exception of Elon Musk who can make the price move with a simple 140 character tweet or meme). Although I am very positive on the price of Bitcoin over the medium to long term, and would encourage everyone to have at least a small portion of your investment portfolio allocated to BTC, ETH and some of the DeFi tokens, it's hard to know for certain what will happen over the course of the next few weeks and months.

Based on what I have read, seen and heard I believe that the the short term price action will most likely be sideways or possibly even down, rather than a retest of the all time highs reached in April. Here is why:

Historical corrections (I took at a look at the 50%+ price moves) have taken almost a year for them to make new record prices. The table below summarizes that data:

Interestingly there was a 50% correction within a 50% correction between Dec 2017 and April 2021 with the June 2019-March 2020 61% fall. Given that as of today we are only 60 days or so into the current correction phase, patience will most likely be a virtue.

If you recall, I had highlighted some excellent financial podcasts that one should listen to if you want to increase your knowledge of markets and gain insights into what is going on. Here is that link: 

https://thrivingwithinterest.blogspot.com/2021/05/top-5-podcasts-to-increase-your.html

I was listening to Laura Shin's Unchained podcast yesterday with Rafael Shultz-Kraft and Willy Wu. They are generally more bullish on the short term price action of Bitcoin, but highlight some of the positive and not so positive datapoints that could shed some light on where Bitcoin goes from here. Laura Shin makes it a point to highlight 3 statistics that paint a dour picture for BTC:

• According to CoinShares, Bitcoin investment products registered $141 million in outflows over the past week. (Ethereum investment products saw an inflow);
• The Block reports that daily Bitcoin transactions fell to 217,000 on June 6, a number not seen since 2018. In dollar terms, this is a roughly $10 billion difference in on-chain volume for Bitcoin falling to $7.7 Billion.
• The Block also noted that tweet volumes "have nosedived since the middle of May (despite the hype from the Miami Bitcoin Conference).

From a technical perspective, we are at a very important level. If BTC cannot hold these levels, then we very well could see a retest of $24,000. Here is the chart that I have been using:

Bottom line is this, although the long term prospects of Bitcoin are very positive, and I fully expect it to be much higher from here, in the short term we shouldn't expect to see a $60,000+ price anytime soon.