U.S. markets closed
  • S&P 500

    4,112.50
    +49.46 (+1.22%)
     
  • Dow 30

    34,021.45
    +433.79 (+1.29%)
     
  • Nasdaq

    13,124.99
    +93.31 (+0.72%)
     
  • Russell 2000

    2,170.95
    +35.81 (+1.68%)
     
  • Crude Oil

    63.79
    -0.03 (-0.05%)
     
  • Gold

    1,826.80
    +2.80 (+0.15%)
     
  • Silver

    27.18
    +0.12 (+0.45%)
     
  • EUR/USD

    1.2089
    +0.0013 (+0.11%)
     
  • 10-Yr Bond

    1.6680
    -0.0270 (-1.59%)
     
  • GBP/USD

    1.4046
    -0.0011 (-0.08%)
     
  • USD/JPY

    109.4500
    -0.2100 (-0.19%)
     
  • BTC-USD

    49,527.12
    -5,118.01 (-9.37%)
     
  • CMC Crypto 200

    1,340.15
    -47.76 (-3.44%)
     
  • FTSE 100

    6,963.33
    -41.30 (-0.59%)
     
  • Nikkei 225

    27,448.01
    -699.50 (-2.49%)
     

Despite Price Drop, Bitcoin’s ‘Fundamental Narrative Has Not Changed,’ Stack Funds Says

  • Oops!
    Something went wrong.
    Please try again later.
Damanick Dantes
·2 min read
  • Oops!
    Something went wrong.
    Please try again later.

Bitcoin’s recent price drawdowns – the percentage decline from peak to trough – shouldn’t come as a surprise for cryptocurrency traders used to volatility. But it could present opportunities to buy the dip, according to a new report by Stack Funds, a Singapore based digital asset investment firm.

The near 15% decline in the bitcoin price (BTC) earlier this week is on a par with previous drawdowns that took roughly five to 10 days to recover. “Drawdowns happen all the time, and crypto markets are no different from traditional markets,” wrote Stack Funds.

  • “The fundamental narrative for bitcoin to the upside has not changed,” the analyst wrote, noting recent news items such as WeWork’s acceptance of cryptocurrencies as a form of payment and Venmo facilitating crypto transactions on its platform show increasing adoption by businesses and mainstream users.

  • “Hence, it might be good … to turn this into a buying opportunity if [investors] are looking to increase exposure of digital assets in their portfolio,” wrote Stack Funds.

  • BTC drawdowns have occurred every month since the start of this year but most ended with sharp recoveries, achieving newer highs in the following month.

  • However, in a bear market drawdowns of more than 20% can last for several weeks or months.

According to Ecoinometrics, a cryptocurrency newsletter, the market dynamics are consistent with what might be expected in the year after a “halving” on the Bitcoin blockchain. A halving is when the blockchain automatically cuts the rate of issuance of new bitcoins by 50%, and it happens every four years. The last one was in May 2020.

Related: The Future of Money Is Unbundled

“Right now, we are in another one of those drawdowns that commonly happens during a post-halving bull market: 20% drawdowns, five days, nothing special,” Ecoinometrics, wrote Wednesday. “Honestly, the current price action does not look like a bull market top for bitcoin.”

Related Stories