Is Bitcoin's correction all that uncommon?

On this study we quickly examine if Bitcoin's 2018 correction is an unusual phenomenon in financial markets and how it is compared to other industry leaders.

For our example we use Alibaba a reformer in the Retail Industry and Netflix a reformer in Entertainment. We consider Bitcoin to be the reformer in the Financial sector. All assets have fairly recently joined the market scene but revolutionized it, as opposed to similar cases that weren't used like Amazon, Apple or Google that have been around and well established for far longer. Facebook (reformer in Interactive Media & Service) could be used also but its growth was less parabolic.

At a glance we see that all 3 assets enjoyed a parabolic growth since 2015:


- Bitcoin > 10000%, Alibaba > 260% and Neflix > 800%.

After their all time highs, a significant correction followed:

- Bitcoin > 70%, Alibaba > 380% and Neflix > 37%.


It is obvious that such corrections are not uncommon for market leaders/ reformers and on the contrary quite common to industry reformers that have enjoyed a sharp period of extreme growth. Such corrections are typically healthy for the asset's progression. Although of course Bitcoin's correction is almost twice as much and twice as long, we need to consider two facts: It grew prior to this equally disproportionately and also the Financial Sector's market capitalization is twice as big (>$7 trillion) than Amazon's Consumer Sector or even more so Netflix's Entertainment Sector.

So during a common market correction investors as usual need to identify the right time to position themselves for the next growth period.



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