When will the “Bitcoin Crash” end?
Bitcoin - the most famous in the world and, as it was believed, the most reliable cryptocurrency fell to its lowest level and was worth less than 20 thousand dollars. However, Bitcoin's rivals in the cryptocurrency market are not going through the best days either: Ether (aka Ethereum) lost 73%.
The fall of the cryptocurrency market was facilitated by the fact that Celsius, one of the leading companies that gave loans in cryptocurrencies, froze the assets of depositors and banned the transfer of cryptocurrencies between accounts.
What experts say?
After a certain fait accompli, experts can explain the situation. They believe that the global economy is going through a period of adjustment due to the pandemic and the war in Ukraine.
Rising interest rates, declining living standards, and inflation are making it harder for large investors to get rid of their funds. This is also causing many ordinary investors to have nothing to invest in. Even if it were not for these factors, who would want to take risks with cryptocurrency?
The collapse of two relatively less known cryptocurrencies, Terra Luna and Terra USD, in May did not improve the confidence of the cryptocurrency market. As a result, investors started to sell their assets. This led to the accelerated depreciation of Bitcoin, which is unlike traditional assets such as real estate.
Well, in recent days, events have begun to develop rapidly:Binance, the world's largest cryptocurrency exchange, banned all transactions with Bitcoin for several hours. This was officially explained by the fact that one of the transactions misled, but few believed it.
• The company Celsius, which specializes in providing loans in cryptocurrencies, did the same, only the reason was not technical difficulties, but extraordinary market conditions.
• Finally, the crypto exchange Coinbase announced the dismissal of 18% of its employees due to a drop in demand for its services (“crypto winters,” as the company put it).
• The panic caused by these events and led to a further fall in the cryptocurrency rate, which can already be fully called a collapse.
Bitcoin Crash Cycle
The fall of Bitcoin is due to a decrease in interest in it. The rate of the most popular cryptocurrency is falling against the backdrop of a general sale of risky assets, notes CNBC. Today, Bitcoin’s price is on the lowest level since the end of 2020. The capitalization of Bitcoin has fallen to below $425 billion, and the total capitalization of cryptocurrencies has fallen below $1 trillion for the first time since February last year – the market has lost about $200 billion since the end of last week.
Bitcoin, like any cryptocurrency in principle, is a very peculiar and very unreliable asset. It is an asset whose value is determined by how much people want to consider it a valuable asset. Therefore, its fluctuations will be, and will be, large throughout the entire time of its existence.
The current fall in the value of bitcoin is associated not so much with real processes in the economy, but with the throwing of people, the specialist added. The unpredictability of their actions creates sharp jumps in any cryptocurrency.
Now, apparently, Bitcoin has become more difficult to use for various transactions. Again, the economy of many countries is in crisis and there are no predictions how strong it will be. Under these conditions, interest in Bitcoin has fallen sharply, that's all.
It is hardly possible to predict what will happen tomorrow. For assets like Bitcoin, an interval of even a few weeks means nothing at all. The vibrations can be very strong, and in most cases, investors should not pay attention to this.
Perceiving Bitcoin as an asset for the accumulation of funds is a dangerous undertaking. According to the specialist, cryptocurrency is convenient for quickly moving finances. Actually, this is why so many people use bitcoin. Because it is very convenient to use it for some operations. But to say that this is an asset that can be used, say, in order to save money for five to ten years, is, any economist will say, at least dangerous.
For those with Bitcoin funds, it is best to wait. And then investors should think about revising your financial portfolio.
Bitcoin price may fall to $10-12K
The crypto winter has already begun. Bitcoin is losing its value very fast and by November 9,2022 the price was decreased by 21%.
On November 8, reports surfaced that users were unable to withdraw funds from FTX, most likely due to the mass withdrawal of assets by users, the exchange did not have enough liquid reserves. Later, the largest crypto exchange Binance announced its intention to buy FTX in order to overcome the crisis, but now this is only an agreement of intent.
If this problem did not get its proper resolution, then the consequences will be vital and life changing for the entire industry, since a large number of other projects and cryptocurrency assets depend on FTX. The default of one of the largest players will cause a loss of confidence in the entire sector and will become another argument in favor of more stringent regulation of this area. The resolution of the current situation with FTX will be one of the main factors affecting cryptocurrency quotes in the near future, an expert from the ACRA corporate ratings group explained.
The main reason for the sharp decline in quotes was the lack of liquidity in one of the largest crypto exchanges FTX, which led to a decrease in confidence in the crypto industry and the withdrawal of funds by investors. In addition, the trend is reinforced by the expectations of the global crisis and the tightening of the monetary policy of the Fed, as well as world banks. In many experts’ opinion, the price of Bitcoin may even fall to $10-12 thousand by the end of 2022, and the coin’s recovery will be no earlier expected than in two or three years.
Is there any hope?
Theoretically, yes, but for this, those who have not yet got rid of the cryptocurrency do not need to part with it, other investors should start buying Bitcoins, and this has happened before.
Moreover, cryptocurrency lovers will tell you that now, perhaps at the lowest point of the fall, this is exactly what you need to buy Bitcoins, and then just sit and wait for the situation to improve and Bitcoin to gain strength again.
There are many stories on social networks about the quick enrichment of those who did not lose faith in cryptocurrency, and the love of Bitcoins of many celebrities (the same Elon Musk admitted this more than once, and his Tesla company invested one and a half billion dollars in Bitcoins last year) attracts him new means.
However, most financial advisers warn that one should be very careful, and only the most courageous investors would take such a risk.
However, when in October 2021, Hollywood star Matt Damon spoke out in support of cryptocurrencies with the slogan “Fortune favors the brave”, he was watched by 28 million viewers, among whom there were probably many such daredevils. It is interesting how today, when the cryptocurrency has fallen in price three times, these brave men evaluate such financial advice.
Winter has already arrived at the cryptocurrency market. Previously, this phenomenon has already occurred in 2017–2018 years. So, the cyclical nature of the market is noticeable in four years, and during the period of growth, the value of coins not only recovers, but increases two to three times. The crypto winter will end in a year and a half, then the currency quotes will again show explosive growth. According to a positive forecast, the price of Bitcoin will reach $70,000 in three to four years.
The fundamental factor in the fall of digital currencies is that investors stop hoping for an influx of fresh money that it would not be a pity to invest in risky assets. Other experts think that new highs should be expected by the end of 2025. During that period, the new US president will generously distribute promises, including the injection of new funds into the economy.