I understand there’s a temptation to panic and make snap decisions when things like this happen. We crashed to just below $600, and we’re back at just under $800 as of writing. But, anyways, here’s the normal series of events.
1.) Price drops due to news story (as of late, the Chinese ruling on BTC usage)
2.) Many users sell, often too late due to markets being unavailable (Here’s looking at you, Mt. Gox)
3.) Price bottoms out. ($575-ish this time)
4.) Prices rises slowly over the next twelve hours and “stabilizes” a decent chunk below where it was before the crash.
5.) Sellers feel like morons and proceed to be angry.
I’ll level with you, price corrections, crashes, whatever you want to call them, make me nervous too. We have to remember that Bitcoin is in its infancy, and that it is, and will be, a high risk market for a long time (years). We need to accept that. This market isn’t stable. Any money you put in you should be willing to lose, as with any high risk investments.
Reddit user nagdude mentioned the idea of price discovery in the Reddit comment section, and was right, it’s important to make a distinction here. Rather than call this a crash, as many have (as have I, but for the sake of not confusing people any more than I need to), it would be more correct to call it price discovery. As different markets rise, fall, and have other effects, we see the ripples of that news turn into huge sweeping gains and losses, due to the young age of our dear cryptocurrency. Price discovery implies that we have no idea what the “correct price” is for Bitcoin, which is absolutely true, and what bothers me about estimates, speculation, etc. We are simply on a journey to find what the market will eventually deem a suitable range for Bitcoin, and, if major news happens around there, I’m sure the price will change once again. Change isn’t bad people, it’s what helps our currency grow in the long run.
Price corrections are to be expected. Don’t freak out when they come around, because they will come around again. I don’t want to make it sound like Bitcoin shouldn’t be an all inviting community, but at this stage of confusion and growth, it’s not very hospitable to those that don’t listen up when concepts are being talked about. The more you know about Bitcoin, the better equipped you’ll be to make the proper decision on when to sell. But, if your rationale for selling is “the price dropping”, then you simply might want to come back later.
