The announcement on September 15th that several large Chinese exchanges were closing sent bitcoin on a rollercoaster ride. The news quickly saw bitcoins price drop to below $3000 usd. Following this dip the trading volume for bitcoin exploded causing it to rise $600usd in less than an hour and ended up rebounding to just below $3900 usd by days end.
Bitcoin prices are currently hovering between $4000-$4100usd and yesterdays sudden “flash” sale caused investers to buy during this dip and recover the 30-40% losses from the previous day. Many investors saw this dip as an opportunity and quickly drove the price back to a more normal level. Even major investment firms like JP morgan who criticized bitcoun found themselves investing in the sudden market drop.
Educated traders were able to make a ton of profit selling at the to and buying back at the bottom of the market. Despite taking an overall hit to bitcoin made many savy investors a lot of money on the 15th. The announcement by litecoin creator Charlie Lee alerted people to the closing of some Chinese exchanges and suggested that there would be a market “dip”. This is not the first time that we have seen this dip and rebound. In January when China’s central bank and bitcoin exchanges started having problems we saw a similar event where bitcoin price dropped from nearly $1200usd to $735. This saw bitcoin come back and rally to $1300 in March and nearly $2700 in May. This continued pattern of dips or correction is always followed by even greater upward rallies shortly after.
The moral of the story is to try and predict when to sell and rebuy bitcoins for a maximum profit. This is sometimes easier said than done but usually historic data can help you confidently make these decisions like in this bitcoin dip and rally scenario. If you are unsure of the proper time to buy and sell, you will just have to weather the storm, hold your coins and wait for the next big rally.