Keep Calm and HODL On? 3 Reasons to Look Past Bitcoin's Price Rout

Zooming out the lens a bit and taking a macro perspective, there are at least three plausible reasons to think this may be just a hiccup for bitcoin.

Retail bitcoin purchases are on the rise at the popular consumer app Square as well.

All else equal, the expected halving of mining rewards next year bodes well on the supply side since it will reduce the amount of new bitcoin regularly injected into the market.

"It's actually good that it's going to take longer for bitcoin to hit the next all-time high because it shows how the market is maturing and with more institutions jumping in," said Josh Rager, an analyst and co-founder at Blockroots, an education platform for trading focused on the BTC market and crypto-assets.

Gurbacs' firm, for example, withdrew a proposed bitcoin exchange-traded fund from consideration by the U.S. Securities and Exchange Commission in September, after the regulator signaled it was in no hurry to approve any such vehicle for retail investors.

Another encouraging sign for the bulls is the fact that first-time buyers of bitcoin through Square's Cash app have roughly doubled, with the company's bitcoin revenue climbing 244 percent year-over-year to $1.27 billion in the third quarter.

Admittedly, Square only started offering bitcoin purchases in November 2017, so that triple-digit growth is from a small base.

The company's profits from bitcoin sales have been comparatively tiny, in the low seven figures.

"Bakkt trading volumes are steadily increasing, retail purchases on Square are at high levels, and platforms like Fidelity continue to create comprehensive access to Bitcoin for their customers - all of which are bullish long-term signs for bitcoin," Chu said.

Rager noted that the hash rate, a measure of how much computing power is being devoted to the bitcoin network, has tripled since the previous all-time price high of $20,000 December 2017.In his interpretation, institutions are selling to force weaker hands to capitulate, so the larger funds can accumulate BTC at lower prices ahead of the halving expected in May 2020.Jonny Moe, a crypto day trader and analyst, agreed that the halving was the single biggest factor relating to the bullish long-term case and that BTC itself is a deflationary currency whose purchasing power should grow over time.