The 2018 Crash

By December 2018, Bitcoin had fallen from nearly $20,000 to $3,200. An 84% decline. The bear market had lasted almost exactly a year.

It was brutal. People who had bought near the peak — often their first investment of any kind, often with money they couldn’t afford to lose — had watched it collapse. The press that had breathlessly covered the rise was equally breathless about the fall.

But the on-chain data told a quieter story.

Throughout 2018, as the price fell, a metric called “Bitcoin held for more than one year” kept rising. Long-term holders weren’t selling. In fact, the cheaper Bitcoin became, the more accumulated into wallets that showed no signs of moving.

This is called the HODL wave — a term from a famously misspelled Bitcoin forum post that became a community motto. The people who understood what they held, who had been through previous crashes, weren’t panicking. They were waiting. Many were accumulating.

By the end of 2020, Bitcoin was at $29,000 — nine times its 2018 low. By November 2021, it reached $69,000.

Every single person who bought at the peak of 2017 and held through the 84% crash was in profit four years later — if they held.

The 2018 crash is not a cautionary tale about Bitcoin. It’s a cautionary tale about buying anything without understanding it, without a time horizon, and without the psychological preparation to sit through pain.

The asset held. The weak hands didn’t.

Tomorrow: Phase 4 Block 1 recap — the early years.

— The Daily Bit