Why does a decline usually follow an increase?
* Supply and demand dynamics: Bitcoin has a limited supply (21 million coins). When the price drops significantly, some investors see an opportunity to buy at a low price, which increases demand over time and drives the price back up.
* Halving: The Bitcoin mining reward is halved approximately every 4 years. This reduces the new supply of Bitcoin, creating additional scarcity and historically contributing to driving the price up after a period.
* Economic and psychological factors: Strong increases in Bitcoin are often linked to global economic factors, such as inflation or falling interest rates, which lead investors to seek alternative assets. The 'fear state' that drives people to sell during declines is often followed by a 'greed state' that encourages them to buy at the onset of an increase.
However, the following should be noted:
* Sharp volatility: The cryptocurrency market is known for its extreme and unpredictable volatility. Even if a rise is expected, the path may be filled with ups and downs.
* Unexpected factors: Various factors can affect the price of Bitcoin, such as government regulatory changes, hacking of trading platforms, and technological developments. These factors can drastically change the market trajectory.
* No guarantee: Despite historical patterns, there is no guarantee that the past will repeat itself. Investing in Bitcoin and cryptocurrencies involves high risks.
In summary, it can be said that Bitcoin has a history of sharp declines followed by significant increases, but this is not an indisputable law in the highly volatile cryptocurrency market. Any investor should conduct their own research and be aware of the risks before making any investment decision.