Bitcoin about to crash

Why Is Bitcoin Going Up, and Will It Crash Soon? What’s Next as Price Doubles to $40K

Bradley Keoun

Muyao Shen

Why Is Bitcoin Going Up, and Will It Crash Soon? What’s Next as Price Doubles to $40K

Bitcoin’s prices reached an all-time high of above $40,000 less than a month after breaking $20,000 for the first time. Since the start of the most recent rally, ostensibly begun in October, its value has increased fourfold.

So for pros and newbies alike, or if you want to be the cryptocurrency expert at your next Zoom party, it’s natural to ask: Why are prices going up, and will bitcoin crash?

Bitcoin was invented just 12 years ago as a new type of electronic payment system, built atop an Internet-based computing network that no single person, company or government could control. The reality is the bitcoin cryptocurrency’s trading history is so short, with methods for valuing the asset still largely untested, that nobody really knows for sure what it should be worth now or in the future.

Subscribe to ,

That hasn’t stopped digital-asset investors or even Wall Street analysts from putting out price forecasts ranging from $50,000 to $400,000 or beyond.

Based on CoinDesk’s reporting, here are a few key reasons why bitcoin prices have recently rallied:

• Demand from institutional buyers, many of them eyeing bitcoin as a hedge against inflation. The cryptocurrency is seen as a hedge against inflation because, under the network’s original programming, only 21 million bitcoins can ever be created; so there’s a contrast with central banks like the Federal Reserve that can decide based on a committee vote to print more money. Big asset managers including Tudor Investment and Guggenheim Partners have announced bitcoin purchases or wagered on prices using futures contracts on the Chicago-based CME exchange. Even old-line Wall Street firms such as Morgan Stanley have weighed in with bullish pronouncements. Analysts at JPMorgan Chase, the biggest U.S. bank, recently predicted a price of $146,000 over the long term.
• The U.S. dollar’s decline in foreign exchange markets. The U.S. Dollar Index, a gauge of the dollar’s value against major world currencies like the euro and Japanese yen, slid 6.8% in 2020 and is down again in 2021. That’s key for bitcoin because the cryptocurrency’s price is mostly denominated in U.S. dollars. Possible reasons for the greenback’s decline include the Federal Reserve’s $3 trillion-plus of money printing over the past year, which is roughly three-quarters of the entire amount previously created in the U.S. central bank’s 108-year history. Images of protestors storming the U.S. Capitol on Wednesday probably didn’t burnish America’s leadership role on the global stage, and now many economists are predicting that big spending plans under a Democratic-controlled government would lead to new stimulus bills and potentially outsize government budget deficits for years to come. Much of those extra costs could be financed through additional Fed money printing.
• Retail purchases. Many individuals are speculating on bitcoin prices, and it’s become increasingly easy to buy bitcoin, with big services like PayPal enabling purchases last year. Analysts for the digital-asset firm ByteTree noted this week that blockchain data appear to show a high concentration of bitcoin purchases in the amount of $600 — the same amount as the American stimulus checks sent out in the latest U.S. coronavirus emergency aid package.

All this may have led to a tremendous rally over the past few months. But could bitcoin prices crash? Of course they could, several analysts told CoinDesk.

The cryptocurrency’s price is notoriously volatile, and substantial and unexpected price swings aren’t uncommon. Below is a sampling of comments from cryptocurrency analysts and other financial experts on how a pullback might look, and what might cause it.

• Bitcoin “has been and remains extremely volatile,” said Joe DiPasquale, CEO, BitBull Capital, a cryptocurrency-focused hedge fund. As recently as Monday, he noted, after prices had climbed to a new all-time high, they tumbled almost $7,000. “What causes this is that people can use lots of leverage, so they can easily get washed out.” He sees a correction as possible, though there appear to be plenty of interested buyers around $28,000, so that level might function like a price support.
• There hasn’t been a single year since 2013 when prices have not fallen at least 25% from a high point reached earlier in that year, said Gavin Smith, CEO of the digital-asset firm Panxora. He said he wouldn’t be surprised to see bitcoin prices rise to $70,000 or $80,000, nor a setback of 40%. Medium term, he’s bullish: “Over a three-year period, this is a great asset.” But over the long term, there’s a risk that technological developments could overtake bitcoin. “Even with quantum computing, there’s nothing on the horizon that indicates that could happen,” he says, “but it’s always dangerous to completely ignore the risk.”
• Bitcoin prices could rally two to three times from their current level before falling back to about where they are now, said Mike Venuto, co-portfolio manager of the Amplify Transformational Data Sharing exchange-traded fund, which invests in blockchain-related stocks. That would imply a retracement of more than two-thirds from that hypothetically new all-time high. “What’ll cause a crash more likely is overexuberance on the upside. I don’t think we’re there yet.”
• “There will be swings, and yes, the swings will be wild,” said Denis Vinokourov, head of research for the cryptocurrency prime broker Bequant. “You have a lot of retail flow that tends to panic.” He sees prices going up in the long term, at least partly based on the bullish expectations of big Wall Street firms. “Can it go to $4,000? Yes.” One potential trigger for a rapid sell-off could be any actions brought by authorities against the company behind tether (USDT), a privately issued, dollar-linked digital token known as a “stablecoin” that has become a key source of liquidity in digital-asset markets. New York State prosecutors are currently battling Tether in court due to its finances.
• “The history of financial markets is the history of bubbles,» said James Angel, Georgetown University finance professor. He notes that authorities could move to crimp the bitcoin rally if they start to get worried that it’s becoming a threat. “Almost everybody who tries to start their own money does so in competition with a national currency, and it usually gets shoved aside by regulators.”
• «While we’re currently seeing an unequivocal expression in the market’s bullish sentiment, a correction could well be on the horizon,» said Sui Chung, CEO of CF Benchmarks, a cryptocurrency provider. «This is a natural part of market mechanics. While it may dampen near-term enthusiasm, it will ensure future price rises remain grounded.»
• “There is likely to be profit taking along the way, causing temporary dips,» said Guy Hirsch, managing director for the U.S. at the trading platform eToro. «But given the extraordinary amounts of adoption by institutions, it would be a surprise if bitcoin dropped below $20,000 any time soon.”

So for the Zoom party, you can tell them: Yes, according to the experts, a crash is probably coming but that’s typical for bitcoin, and if history is any guide, prices will probably recover.

Источник

Bitcoin crash history: why did Bitcoin crash & why Bitcoin will drop again

Introduction

Worried about Bitcoin crashing and your crypto wealth going to zero? If you haven’t been a part of the crypto space for a long time, this is definitely a real concern.

Yet, the Bitcoin crash history might surprise people. Guess how many times Bitcoin has had horrific crashes. One? Two? Four?

Try 13!

(Crashes in this case are measured as times when the BTC price was down by 30% or more). Image credit: HowMuch.net, a financial literacy website

Moreover, Bitcoin has been much more volatile in the past. Did you know that Bitcoin lost 87 percent of its value in three days from April 10, 2013 to April 12, 2013? Despite that drastic crash in Bitcoin’s price, Bitcoin still increased in value nearly 100 times, or 10,000%, from the beginning of 2013 (

$10) to the end of November 2013 (

For more perspective, here are some of Bitcoin’s biggest crashes and the events that helped cause them.

Bitcoin Crash History: Bitcoin’s 5 Biggest Crashes

1. June to November 2011, -93%

Bitcoin’s first major crash happened in 2011, when Bitcoin went from $29 all the way down to $2. Such a dramatic crash (93%) has not happened since.

The major reason for this epic crash was the hacking of Mt. Gox, the dominant centralized crypto exchange in crypto’s early days. A hacker gained access to Mt. Gox user accounts and was able to falsely “crash” Bitcoin’s price to $0.01.

Although this crash wasn’t real, it was a huge blow to Bitcoin and the broader ecosystem in its early days. Unfortunately, however, this was not the last Mt. Gox fiasco, as you’ll see shortly.

2. August 2012, -56.7%

Bitcoin’s next big crash came a year later in summer 2012, when Bitcoin Savings & Trust, a ponzi scheme promising large weekly payouts to investors, stopped its payouts. Bitcoin Savings & Trust’s operator, Trendon Shavers, eventually went to jail for his activities.

Crypto-based ponzi schemes (paying earlier investors in the scheme with new investors’ money) pop up time and time again, even though Bitcoin does not have any sort of investment yield in the way that something like dividend-paying stocks do. Image credit: Edukasi Bitcoin

3. April 2013, -87%

The aforementioned big crash over a few days in April 2013 was a result of both Bitcoin rising too fast and yet another case of mismanagement at Mt. Gox (it wouldn’t be the last). After a huge 4 month rally, BTC finally started to cool off, with the price dropping significantly. On April 10th, 2013, the price of Bitcoin dropped 52% in 6 hours from 12:00 (12pm) UTC to 18:00 (6pm) UTC.

However, this situation was only made worse as Mt. Gox failed to handle the increased amount of trading because of the price drop, causing the price to drop even further. And it didn’t stop there! Hackers decided to DDoS the Mt. Gox site, or take it down.

Considering that Mt. Gox was handling over 70% of Bitcoin transactions at its peak (way more than any centralized exchange today), this caused extreme uncertainty and selling pressure in the community.

4. December 2013 — January 2015, -84.6%

In November 2013, Bitcoin broke its previous all-time high of $260, resulting in the price going absolutely parabolic. Within the course of about a month, Bitcoin’s price went up nearly 5x or 500%, peaking at around $1,150 in early December.

After this tremendous rally, Bitcoin began to correct in price. Again, this was only made worse — yet again — due to problems at Mt. Gox. On February 10, 2014, Mt. Gox halted all withdrawals before filing for bankruptcy on February 28, 2014, announcing that they had lost 850,000 Bitcoin, worth about $450 million at the time.

The Mt. Gox hack was one of the most catastrophic crypto incidents of all time and probably set back the development of the space by a few years. Image credit: Wikipedia

5. December 2017 — December 2018, -83.8%

2017 saw Bitcoin go on a massive rally from $1,000 in the beginning of the year to $20,000 in December. However, Bitcoin’s price quickly began to slide and would do so for an entire year before beginning to stabilize.

While there was no Mt. Gox type event that might’ve had a hand in crashing the market, the market was likely overdue for a correction considering how frenzied the market was by the end of 2017.

Conclusion

As you can see, Bitcoin crash history tells us that crashes in Bitcoin price, including extremely drastic ones, are nothing new. It’s not a stretch to say that we can expect to see more in the future as this asset continues to mature.

The US stock market, which is now one of the most mature and valuable markets in the world, was also much more volatile in its early days:

The early US stock market was much more volatile than today’s US stock market. Not to mention the US stock market has also had its fair share of catastrophic crashes, including the Wall Street Crash of 1929, which started with stocks crashing 89% and helped start the Great Depression, which saw 1 in 4 Americans unemployed. Image credit: The Motley Fool

Nevertheless, through all its ups and downs, the US stock market is still here. Likewise, throughout its more than 10 year history, Bitcoin has yet to be wiped out, despite the hundreds of times that it’s been called “dead”.

While Bitcoin has indeed suffered some serious crashes throughout its existence, here’s what the price of Bitcoin looks like over the long run:

Image credit: Buy Bitcoin Worldwide

As you can see, even though many have called it a scam, or said that it was “dead”, Bitcoin has proven resilient and its long-term trend seems to be up. In fact, Bitcoin is the best-performing asset of the 2010s, and the competition isn’t even close (check out the live Bitcoin BTC to USD price chart today).

For more information on that statistic as well as why it’s possible 1 Bitcoin will be $100,000 or more, check out our future of cryptocurrency article!

This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.

Источник

The Fall of Bitcoin — Will Bitcoin Crash?

Will Bitcoin crash: expert opinion about Bitcoin bubble burst & whether Bitcoin crash will happen. Find out is Bitcoin going to crash in this guide.

Last Updated: January 05, 2021

BitDegree.org Fact-checking Standards

To ensure the highest level of accuracy & most up-to-date information, BitDegree.org is regularly audited & fact-checked by following strict editorial guidelines. Clear linking rules are abided to meet reference reputability standards.

All the content on BitDegree.org meets these criteria:

1. Only authoritative sources like academic associations or journals are used for research references while creating the content.

2. The real context behind every covered topic must always be revealed to the reader.

3. If there’s a disagreement of interest behind a referenced study, the reader must always be informed.

Feel free to contact us if you believe that content is outdated, incomplete, or questionable.

There has been a lot of speculation regarding Bitcoin prices recently. More precisely — will Bitcoin crash? And if it will… When will Bitcoin crash?

There’s no secret that Bitcoin (same as most other cryptocurrencies) is experiencing a major downfall. What started as a minor crash back at the beginning of 2018 turned into a seemingly never-ending spiral of crashing and lowering in price.

Whilst browsing and sorting through the net, you might encounter many different explanations and speculations. Today we’re going to try to sort them out and figure out why is Bitcoin crashing.

Furthermore, I’m going to analyze a few of the most popular speculations about the decline of this cryptocurrency and provide a logical, argument-based answer to the burning question — is Bitcoin going to crash?

Table of Contents

The Rise of Bitcoin

For some time now, Bitcoin has been known as the icon of cryptocurrencies. But despite its current popularity and recognition in the mainstream, the story was very different at the time of the coin’s inception back in 2009.

Latest Coinbase Coupon Found:

GET UP TO $132

By Learning — Coinbase Holiday Deal

This Coinbase Holiday Deal is special — you can now earn up to $132 by learning about crypto. You can both gain knowledge & earn money with Coinbase!

GET UP TO $132

By Learning — Coinbase Holiday Deal

This Coinbase Holiday Deal is special — you can now earn up to $132 by learning about crypto. You can both gain knowledge & earn money with Coinbase!

Your Discount is activated!

During the days of Bitcoin’s infancy, the cryptocurrency was worth next to nothing. The creator (or creators) nicknamed Satoshi Nakamoto launched Bitcoin at the beginning of 2009, but the coin gained notable value only in 2011.

Somewhere in the first half of 2011 Bitcoin’s price breached the one dollar mark. It was truly a historic moment for the coin, but as time would later go on to show — the first of many.

It was almost normal to see Bitcoin crashing and climbing back up for the next two years or so. And the price swings were quite noticeable, too — the coin would go for anything in the range of $3 to $30. But the first actual shockwave that the early crypto community experienced happened in April 2013. At the beginning of the month, Bitcoin’s price had capped at $266 — more than ever before.

This type of sudden, explosive growth was a clear indicator from the cryptocurrency community to the rest of the world that something’s going on. Suddenly, there were more and more people showing interest in crypto or — more specifically — Bitcoin.

Bitcoin breached the $1000 mark somewhere towards the middle of 2017 and went on to reach its all-time high of almost $18.000 at the end of the year. If we take a look at the beginning of 2018, though, we would see a very different type of a story and for some, an answer to the question — when will Bitcoin crash?

The Fall of Bitcoin

Taking one single glance at the Bitcoin price at the beginning of 2018 might leave you very confused — the value of the coin went down from almost $18.000 at the end of 2017 to $6000 on January 2018.

This was the time when people seriously started to wonder — will Bitcoin crash? Keeping in mind the fact that the crypto’s price has been steadily and surely going down ever since makes it quite obvious why people have started to wonder if the “Bitcoin bubble burst” had finally happened.

Throughout the years there have been many Bitcoin (not to mention other cryptocurrencies) price swings that impacted the world of crypto enthusiasts. That being said, never before have people feared Bitcoin crashing as much as in the recent months.

So… Is Bitcoin going to crash completely? Or will it make a glorious return? Let’s see what some of the experts and journalists have to say about the matter.

Will Bitcoin Crash?

Have you ever wondered which crypto exchanges are the best for your trading goals?

Hubspot

According to Clifford Chi from blog.hubspot.com, the question might be very difficult to answer for a wide variety of reasons.

First of all, when considering the question “will Bitcoin crash?”, it is necessary to take a couple of things into perspective. Let’s start with the positive aspects that might persuade the coin to grow.

The Positive Side of Bitcoin

If the word “blockchain” is the first thought that pops up in your head when thinking about Bitcoin, you’re on the right track.

Mr. Chi thinks (and most of the crypto community would probably tend to agree) that blockchain is one of the main factors that would keep Bitcoin alive and running. After all, this type of technology provides both fast AND secure types of transactions between two parties, eliminating any need of a third one (i.e. banks).

Currently, quite a few companies are developing and improving their versions of the blockchain, having invested hundreds of millions of dollars into their respective projects. This fact alone tends to sway the naysayers, for when thinking about “will Bitcoin crashes?” it is hard to ignore the ever-growing interest in the blockchain technology.

Usefulness

Another reason for a possible Bitcoin growth that Hubspot’s Clifford Chi emphasizes is that this coin (and cryptocurrencies in general) are very scarce, yet useful.

Mr. Chi stresses the fact that rare things are valuable. Their natural scarcity and limited supply equate to these things being quite sought after, which in turn makes their prices rise.

Cryptocurrencies are a great example of that. At any given time, the supply of one or another crypto coin has a set amount that will most likely never be raised or breached. Add the fact that cryptos are very useful and versatile to the equation and what you get is a never-ending demand in the crypto world.

Furthermore, Bitcoin has an advantage over the other cryptocurrencies in the market — its fascinating popularity and “rise to fame” story has opened the gates of mainstream success. Today it is considered odd and unusual to meet someone who has never heard about Bitcoin. Add all of these factors up and you get a pretty solid reason for why it would be unlikely to see Bitcoin crashing.

The Negative Side of Bitcoin

On the other hand, though, Clifford Chi from hubspot.com also mentions the possible factors behind Bitcoin’s decline. Probably the biggest ones are bad press and security issues. While bad press might persuade some people to turn their backs on Bitcoin, the lack of effective security might harm the way that this coin is perceived.

As Mr. Chi summarized, it is very difficult to predict a solid answer to the speculations will Bitcoin crash. If the crypto community’s lucky, the rest of the world will keep on participating in the growing of blockchain and various cryptocurrencies, which in turn will most likely lead to Bitcoin’s success.

We see a very different type of prediction when we look at what cnbc.com has to say about Bitcoin crashing.

CNBC reference Nouriel Roubini — a well-known economist — when talking about the “Bitcoin bubble burst”. N. Roubini has even been quoted saying that Bitcoin is the “biggest bubble in human history”.

Mr. Roubini thinks that Bitcoin is not only going to crash — it’s going to reach dead zero. He furthers these claims by stating that “HODL nuts” are going to cling onto their Bitcoins and experience a major loss of revenue because of that.

N. Roubini also mentions that a lot of scams are going to emerge out of this, most notably — wash trades. Wash trading is an act of selling something on the market and then quickly rebuying it yourself. This is done to manipulate the market in a way that’s beneficial to the initial seller. The economist suggests that this is going to be one of the many ways that Bitcoin enthusiasts are going to try and keep this coin alive.

When taking a look into predictions like this, the question “will Bitcoin crash?” becomes more of a gloomy prophecy rather than a speculative question.

Источник