Cryptocurrency is volatile with a history of boom and bus cycles that have many people
questioning.
If a Bitcoin crash is unavoidable the most well known digital currency, Bitcoin had a
wild ride in 2021 reaching an all time high of roughly $69,000 on November 10th, 2021.
However, it has been on a declining trend since 2022 and is now worth roughly $39,000.
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Why is crypto crashing?
Bitcoin has been on a roller coaster ride of late searching and dropping drastically
on the bank of a number of news reports, but it was hardly the only cryptocurrency to experience
a Rocky finish to 2021.
A drop in global markets has been prompted by persistent uncertainty about a new COVID
version and increasing interest rates, which will make it more expensive for corporations
to borrow money.
This is poured over into the cryptocurrency market, combining with anxieties over additional
regulation, the price of Bitcoin and a handful of other famous digital assets plunged substantially
at the start of December in early 2022, cryptocurrencies plunged again, Bitcoin's price sank to roughly
$40,000 per coin around the end of January and has slid considerably lower as the year
has gone on fears over us interest rate hikes and China's continuing crackdown on crypto
are playing a part.
There has also been concern that Russia could ban crypto businesses in the nation.
Why is Bitcoin so volatile?
Unlike traditional types of investments, such as corporate shares, Bitcoin has no underlying
asset its price.
Doesn't depend on how well a business is functioning, but whether investors anticipate Bitcoin will
climb or decline.
This means that the swings in the price are based simply on speculation about how others
think it will perform.
As a result, there can be significant changes in the price of Bitcoin, even in the space
of 24 hours.
There have been a number of situations that have caused the price to fluctuate, negative
stories, a lot of negative reports and fears of greater regulation have pushed the price
of Bitcoin down.
These include Russia, potentially prohibiting cryptocurrency activity in May, 2021.
Elon Musk claimed that Tesla would no longer be taking cryptocurrency payments due to concerns
about the environment sanctions from the Chinese government in June, 2021 on dealing and mining
Bitcoin, Donald Trump labeled Bitcoin as a hoax vying against the dollar to be the money
of the world.
Later that month, UK banks limit payments to crypto exchanges.
FBI officers seized millions of dollars in Bitcoin from crooks UK's financial watchdog,
blacklist bin, one of the top crypto exchanges, big banks, such as HSBC and Santa or follow
suit IMF cautions in August.
The IMF warned against governments utilizing cryptocurrencies as legal cash stating its
widespread usage would undermine macroeconomic stability and might harm financial integrity.
Crypto theft, crypto hackers, poly network stole $600 million in August, 2021 only to
return more than a third of it.
Four days later saying they did it for fun and to expose the vulnerability in the system
before others did positive stories, but there have been many good headlines which have pushed
the price upwards.
During the past year, Morgan Stanley became the first big us bank to provide richer clients
access to Bitcoin funds, but restricted to little more than 2.5% of an investor's total
net worth in March, 2021 in June Elon Musk stated Tesla will likely accept Bitcoin payments.
Again, when more than 50% of its energy demand comes from renewable sources.
Amazon releases a job ad for a digital currency and blockchain product lead fueling rumors.
It may soon accept Bitcoin is payment.
El Salvador makes Bitcoin legal, tender.
Other stories are more mixed in terms of what it means for cryptocurrency, such as the us
central bank.
The federal reserve pondering whether to develop its own digital currency.
Us president Joe Biden released an executive order, which intends to coordinate the us
government's operations surrounding the regulation of digital assets while many crypto and autos
think regulation is a bad thing.
Some say this new presidential order could help with the development of digital assets
to guarantee the necessary consumer protections are in place as Bitcoin's bubble burst.
When assets grow very quickly in price and leap to a record high, normally this makes
a crash much more likely or at the very least a correction, which is when the price falls
back down to a more normal level.
This appears to be the predicament that Bitcoin is in right now.
It took the cryptocurrency 11 years from start to reach to $20,000 per coin, but only three
weeks for Bitcoin's price to double.
From there a decisive year for crypto investors came in 2013, Bitcoin's price soared from
$13 and 40 cents at the start of the year to its height in December of $1,156 and 10
cents before plummeting to about $760.
Three days later, fast forward to 2021.
And the price had surged by more than 700% in 12 months where it is heading next is as
unpredictable will Bitcoin recover.
There are no guarantees when it comes to investing as swiftly as Bitcoin falls, it might just
as rapidly climb.
Again, there are a number of concerns with cryptocurrencies crackdowns in countries like
China calls for more regulation across the globe and foreign mental concerns.
Its prices based completely on guesswork.
Further regulation is considered as a threat to the decentralization of crypto, which is
hurting on pricing.
Bitcoin's advocates point to its excellent qualities, transformative technology, which
could revolutionize industries simpler and cheaper transactions by eliminating away the
middleman easier global trade transactions are more confidential, a safe store of value
because it can't be printed or seized.
Bitcoin has been hailed as a replacement to gold suggesting it may prove itself as a hedge
against inflation.
Given it's volatile nature.
It is feasible that Bitcoin will gather momentum again at some point in the future, possibly
weeks, months, or even years down the line, but no one has a crystal ball.
So it's hard to determine for sure whether Bitcoin will crash in the future.
What value do cryptocurrencies have this question hasn't been asked because the crypto bubble
has been dominated by bullshitters in the echo chamber for so long that absolutely nobody
has bothered to ponder what we will ever use this technology for.
I know it's the technology of the future and it will promote global trade, but we already
have both of those things in the considerably, more stable us dollar.
I can pay my coworkers in Russia or South Korea in a second with considerably fewer
costs by utilizing us D than I can with cryptos.
The truth is none of us have ever utilized the blockchain that backs cryptocurrencies,
the technology we're told we're buying into and promised that would someday form the backbone
of the internet and global finance.
We may have utilized the coins as an investment instrument to gain money, but when have we
employed the technology itself, we haven't, of course, that could change in the future.
And the technology can be more valuable than the promises as investors and general public
become more educated about the underlying technology.
Why are institutions getting involved?
If it's on the side of a bus it's time to buy screams an advertisement from Luno in
London, many seasoned investors feel the ad should suggest the opposite.
If everyone is talking about the same thing, it's a surefire warning that prices have reached
unsustainable Heights and are ready to drop as they did in 2018.
But in the past 12 months firms and institutional investors have gingerly put their toes into
digital assets.
Since central banks throughout the world, responded to the coronavirus pandemic with
easy money policies, huge asset managers and hedge funds have been seeking for strategies
to shield themselves from a return of inflation and the depreciation and value of various
currencies, including the dollar we've seen a step change in institutional interest last
year says James Butterfield, an investment analyst at digital asset expert coin shares.
He notes that about 54 billion of money is invested across 120 cryptocurrency funds a
year earlier.
The overall sum was 3.5 billion among 89 funds.
Cryptocurrencies are here to stay stated.
Christian Ning, global chief investment officer of Deutsche bank's international private bank
in a report.
Central banks are also considering the prospect of issuing digital replacements for domestic
currencies to some observers central bank digital currencies provide legitimacy to the
crypto space while others say it is an attempt by central banks to rest back control of the
industry.
Central banks have always thought that they were key for payments as Randy Crasner professor
of economics at the university of Chicago booth school of business.
And now they've realized they're not, but does it mean that the risks of cryptocurrencies
are going to diminish anytime soon as the uncontrolled market bounces through its recent
price gyrations, it is a long way off from either stability or security.
Will Bitcoin go up if the stock market crashes, not necessarily supporters of Bitcoin, see
it as a diversifier and balanced portfolios, but it did no better than stocks at the onset
of the coronavirus outbreak.
This is because investors panic sold everything in the first two weeks of March, 2020 Bitcoin
fell down almost 40%.
That was when we saw all equity markets take aggressive leg down because of concerns about
COVID 19 adds Rosie Bullard partner and portfolio manager at James Hambro and partners.
So it wasn't exactly a store of value in an equity market reversal that said how crypto
assets perform during stock market falls will depend on why financial markets have collapsed.
If it were an inflationary event such as we witnessed in 1974, most Bitcoin investors
feel it would give protection.
Conclusion is Bitcoin here to stay or is it a bubble ready to pop less than a decade?
Old Bitcoin is worth hundreds of billions of dollars to be exact more than $750 billion.
The cryptocurrency promises to transform global banking by placing control of currency in
the hands of individuals, not states and making financial exchanges more transparent, efficient,
and democratic, but is Bitcoin actually a secure bet.
Supporters say the excitement around the cryptocurrency is justified and previous opponents, including
officials at JP Morgan and Goldman Sachs are progressively hopping on the Bitcoin network.
On the other hand, detractors claim, this extremely volatile digital currency offers
a platform for criminal behavior, including money laundering and trafficking of humans
and drugs free from official scrutiny and control.
And they claim Bitcoin has no intrinsic value.
The price is predicated on market enthusiasm rather than genuine utility.
Now the decision is yours.
So what are your thoughts about Bitcoin?
It be able to recover back to $60,000 or maybe $70,000.
Please share your thoughts in the comment section below.
This would help others while investing with that being said, here we come to the end of
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