Bitcoin is down by over 20 percent over the course of just a couple of weeks. Since its
peak of 69K dollars in November 2021 , the price kept declining. Of course, everyone
was expecting it to shoot again as it did in July 2021 but that doesn't seem to be happening
in the coming future because the fed has raised the interest rate by half a percentage point,
to a range of 0.75% to 1% after a smaller rise in March. It's the biggest interest rate
rise in 22 years. Bitcoin isn’t alone. Literally, every crypto
out there is down. Ethereum is also down by over 20 percent. Even if we look at the stock
market, it's not all sunshine and rainbows. Some stocks like Netflix as we have seen are
so down that even big investors such as Bill Ackman didn't expect that and sold their entire
portfolios. Even the world's biggest and most stable tech company (Apple) is down by over
14 percent at the time of this script. If you think about it, bitcoin isn’t just
down by over 20 percent. Compared to its peak of 69K dollars, it’s literally down by over
50 percent since then. And as the price keeps declining, more and more investors would be
willing to sell off and get out before it's too late which is causing the price to tank
even further. Now the question is, will the price of bitcoin
keep falling? will it collapse by the end of the year? and how did day traders lose
all of the money they have made in the last 2 years just in one week?
We will answer all of these questions and many more, but before we do that, give this
video a thumbs up, and here is a little disclaimer, this is not financial advice and everything
that’s said in this video is for educational and entertainment purses.
When Satoshi Nakamoto created bitcoin right after the 2008 crash, its true purpose wa
s to decentralize the financial system since the fact the entire system was in the hands
of a few major banks caused the great recession in the first place. If there were more checks
and balances on these greedy bankers, there wouldn’t be such a crisis in the first place.
That’s of course a case up to be debated but the idea behind the crypto is really genius.
The only problem is that governments really love controlling the inflow and outflow of
money since that’s the only way to fill the treasury to sustain the country. That’s
why it was initially popular in the black market where people traded illegal goods,
however back in 2015 and 16, more and more people realized the potential of the crypto
which led its price to shoot to the moon. Within a span of a single year (2017) the
price of bitcoin rose by over 2K percent from less than a thousand dollars to almost 20K
dollars before it crashed. That’s when the world got excited about bitcoin and hundreds
of new coins emerged. But what was also happening is that bitcoin started shifting from being
a currency into an asset class of its own. Bitcoin is no longer a medium of exchange
but rather a digital asset like gold whose price fluctuates and people buy it not because
they want to use it as a currency but rather to store wealth or profit from trading it.
In fact, now we have USDT, cryptocurrencies that are tied to the dollar so that people
can use them as a currency, the only question is - how is that different from using real
dollars? In fact, most crypto is traded on platforms
such as Binance of Coinbase which are getting regulated more and more with each passing
day. And that raises the question - of how crypto
is different from traditional banks? The only difference is probably, that transferring
money has become much faster but the fact that financial institutions are pretty much
in control creates the very problem that crypto suppose to solve.
Just because our money is mostly controlled by banks isn't necessarily a bad idea because
most people aren't necessarily good with money either. Most people are financially illiterate,
that's why there are so many scams in the world of crypto.
I mean people made millions of dollars by creating a squid game coin when it was at
its peak. People threw their savings into an asset that they have no idea where it came
from nor had any real information about it. However, they hoped that this is their opportunity
to finally make the millions they always hoped for. Little did they know that it was just
another scam that was waiting for them at the end of the tunnel.
That’s peanuts if you compare that to how much was stolen in 2021. According to Chainanalysis,
Scammers took home a record $14 billion in cryptocurrency in 2021, thanks in large part
to the rise of decentralized finance (DeFi) platforms. Think about that number for a moment,
14 billion dollars! Now you can see where most of the money is
made in the world of crypto. I know that I am going to get a lot of hate for saying this
but it happened whether you like it or not.
A huge chank of that money was stolen through a relatively new but very popular type of
scheme known as a “rug pull,” in which developers build what appear to be legitimate
cryptocurrency projects, before ultimately taking investors’ money and disappearing
for good. Even the police wouldn't help you because
tracking these people isn't a joke. Remember the case with Bitconnect where they stole
over a billion dollars and are still not found. That's why sometimes we need financial institutions
to regulate the market and prevent such scams even though they might sometime misuse their
authority.
Again, I am not trying to defend the greedy banks, they are not saints, but we will leave
that for another video.
14 billion dollars is nothing compared to how much people made in the last 2 years.
The price of bitcoin increased from around 10K dollars to almost 69K dollars, that’s
literally hundreds of billions of dollars worth of value. However, the boom is over,
and is very unlikely that it will come back in the coming future since the fed raised
rates by 0.5 percent. There is always a period of boom and slumps. The period of cheap money
is over and the next couple of years will be a bit harsh. Not only for crypto but for
the entire market.
I mean look at the tech stocks such as PayPal. It didn't just loose everything that it gained
during the pandemic but is down by 40 percent if you compare it to where it has been before
March’s 2020 crash. The stock lost 75 percent of its value since its peak. Netflix, meta,
you name it! Everyohe is Down!
All of them have plummeted dramatically. When the fed raises rates, volatile assets
suffer first since investors prefer to store their wealth somewhere safe. That's why we
have news such as this - Day Trader Army Loses All the Money It Made in Meme-Stock
Era. That doesn't apply only to stocks but also
to crypto. Take the most famous crypto meme, dogecoin, it's down by over 82 percent.
The question is - will the market keep declining? Well, as long as people are selling off and
closing their positions, the answer is yes, but sooner or later that’s going to end
and the market will stabilize and we will get rid of companies that aren't really adding
any real value to the market but are there just because they sound cool.
I know that it's painful to see how your entire portfolio is declining. Take the founder of
Coinbase Brian Armstrong whose net worth tanked from around 13 billion dollars to as little
as 2 billion dollars. The platform showed disappointment earning that some people are
talking about bankruptcy and the worst part about it is that, In the event, the crypto
exchange goes bankrupt, Coinbase says, its users might lose all the cryptocurrency stored
in their accounts too. Which is making the situation even worse.
I wouldn't be surprised if it tanks a bit further but personally, I am not selling my
cryptos since I am not a trader and more of a long-term investor that's why short-term
drops don't bother me much. Thanks for watching and I will see you in
the next one.