Things may seem pessimistic after the major cryptocurrency price crash that occurred this week. Bitcoin (BTC) dropped as low as $3,850, down from $10,500 only a month ago, and most major cryptocurrencies declined over 40% in just 24 hours. However, could this price crash create the perfect conditions for a Bitcoin (BTC) and crypto rally, rather than being the start of a crypto bear market?
It is perhaps possible that this crypto price crash will lead to a speculative springboard. Essentially, crypto prices are now extremely undervalued. Indeed, the price of Bitcoin (BTC) dropped about as low as it was during the depths of the bear market of 2018, and it is already well-known that $3,000-$7,000 per Bitcoin (BTC) is a bargain basement discount price, since Bitcoin (BTC) has rallied as high as $14,000 since the bear market of 2018 ended.
Therefore, investors will likely buy up Bitcoin (BTC) at these low prices, since they know the price of Bitcoin (BTC) will easily double or triple from here. This could lead to a speculative buying frenzy.
If a speculative buying frenzy does develop, and it appears there are signs that this is already happening since Bitcoin (BTC) has risen from $3,850 to over $5,000 as of this writing, it could turn into a sustained bull run all the way back above $10,000.
This is especially possible if the stock market is still showing weakness over the coming weeks and months, which seems likely. Essentially, investors will decide to jump into the Bitcoin (BTC) market, since it will be one of the only asset classes that is gaining value.
Further, the block halving is coming in less than 2 months, and it is well known that Bitcoin (BTC) has always had a major bull run after a block halving, due to the market supply of Bitcoin (BTC) decreasing.
Another factor is that this week’s serious crypto market crash shook out the weak hands, and HODLERS likely purchased most of the Bitcoin (BTC) that was sold, and they will probably HODL until Bitcoin (BTC) goes past record highs.
Putting all of this together, it is possible that this week’s major crypto crash will create the perfect conditions for a bull run. Now crypto prices are drastically undervalued, and investors will begin to buy up crypto, and this could lead to a crypto buying frenzy that turns into a bull run. After that, continued weakness in the stock market could cause investors to flock to Bitcoin (BTC) instead of stocks, and the May block halving will decrease selling pressure and likely cause a major rally.
Ultimately, perhaps this week’s crypto market crash is just a case example of the old saying “it’s always darkest before the dawn.”