Bitcoin Drops 25% After Hitting Record High
On January 20, Bitcoin hit a historic high of over $109,000. Many believed pro-crypto policies under President Trump would push Bitcoin even higher. Instead, Bitcoin has declined roughly 25%, now trading around $82,000 — a level last seen in November 2024.
This unexpected pullback has raised questions among investors. Should Bitcoin holders be worried, or is this just another phase in Bitcoin’s long journey?
Bitcoin’s History Shows Resilience
Bitcoin has seen many sharp price corrections in its history. According to Cathie Wood of Ark Invest, Bitcoin has experienced at least five separate declines of over 77%. The current dip pales in comparison.
Wood suggests long-term holding is key. Her research shows Bitcoin consistently outperforms all major asset classes over three- to seven-year periods. In fact, Bitcoin posted an impressive 44% annualized return compared to just 5.7% for traditional assets — even after losing 65% in 2022.
Holding Bitcoin Pays Off Over Time
Longer holding periods have historically led to better performance. Investors who held Bitcoin for five years saw better results than those who held for three or four years. This compounding benefit makes a strong case for long-term Bitcoin investing.
While volatility can cause short-term pain, patient holders have repeatedly been rewarded. History suggests Bitcoin always bounces back stronger.
Bitcoin Volatility Is Declining
Despite headlines, Bitcoin’s volatility has been decreasing. According to Coinglass, Bitcoin’s 30-day historical volatility currently sits around 3.5%, remaining under 4% for nearly two years.
During the 2020–2021 bull market, Bitcoin volatility spiked as high as 9%. In its early years, it reached 15%. Today, Bitcoin’s price fluctuations are much more subdued, even during major events or pullbacks.
Is Bitcoin Still a Store of Value?
Despite the lower volatility, Bitcoin’s recent price decline has sparked debate about its role as a store of value. Traditionally seen as a hedge against inflation or recession, Bitcoin has recently fallen alongside equities.
Investor sentiment has shifted. In the past 30 days, $5 billion exited Bitcoin ETFs, while $10 billion flowed into gold ETFs. This suggests investors currently view gold as a more stable store of value than Bitcoin.
What Should Bitcoin Investors Do Now?
The recent downturn may feel discouraging, but it’s nothing new for Bitcoin holders. With a long-term view, Bitcoin still offers compelling returns and declining volatility.
Investors with short-term strategies may pivot to gold, especially during macroeconomic uncertainty. But those with a long-term focus may choose to HODL — holding onto Bitcoin until the next upswing.
Final Thoughts on Bitcoin’s Future
Bitcoin remains a highly volatile but resilient asset. Though it has dropped 25% since January, history shows it could recover and surpass new highs. Its long-term growth and improved volatility profile offer compelling reasons to stay invested.
While perceptions shift and markets fluctuate, Bitcoin’s core strengths — decentralization, limited supply, and global acceptance — continue to support its long-term value. In uncertain times, seasoned Bitcoin investors stick to their strategy: HODL.