Bitcoinâ€™sÂ price seems to be losing its foothold as the price suffered a drop of 5% in the last 8 hours. Considering the situation more of this could follow. How much? Perhaps, an average drop of 30% can be expected, especially during bull runs.
Historically, bitcoin seems to correct during bull runs and it isnâ€™t taboo to expect corrections during the bull run. In fact, we have seen it around 20 times during its previous bull runs.
The highest correction was -60% in March 2020 and lasted about 30 days. The shortest correction, however, was -27% in March 2017; this correction lasted about 45 days.
Once we average all the drops, we get 33% drop, which can be expected if we are being statistical. Optimistically, we could see bitcoin dip 27% or less.
Moreover, looking at monthly returns, we can observe that December hasnâ€™t generally been a good month for returns. December has an average return of 9% from 2011 to 2019.
Where will the dip end?
Moreover, this drop from Bitcoinâ€™s new ATH to $16,200 would constitute a 20% drop, which almost falls in line with the aforementioned hypothesis.
What can be done?
The best option would be to buy the dip. Dollar-cost averaging these dips would be the best way to prevent huge drawdowns of oneâ€™s portfolio. (Refer to this article forÂ DCA.)
An alternative method could be to just cash out your positions and sit on the sidelines as bitcoin might head into uncharted waters.