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Is a bitcoin meltdown on the way? Cryptocurrency is volatile, with a history of “boom and bust” cycles that have many people questioning whether a bitcoin collapse is a foregone conclusion.
In 2020- 2021, the digital currency saw a wild journey, reaching an all-time high of about $69,000 on November 10, 2021. However, it has been on a decreasing trend since the beginning of 2022, and it currently has a value of roughly $38,000.
is bitcoin going to crash? Here are reason bitcoin may crash (2022 evidence).
In this essay, we’ll go over:
What is the current state of bitcoin’s worth, and why is it changing?
What causes bitcoin’s extreme volatility?
Is bitcoin’s bubble about to burst?
Whether bitcoin will make a comeback
If the stock market fails, would bitcoin rise?
What is causing the crypto market to crash?
Bitcoin has been on a rollercoaster ride of late, with dramatic rises and falls in response to a variety of news headlines. However, it is not the only cryptocurrency that has had a turbulent year in 2022 and ofcourse we can still see a bull run this just as we all know we are been played most times so as to miss out on trades.
The persistent uncertainty around a new Covid version, as well as increasing interest rates, have triggered a drop in global markets. Higher interest rates will make it more costly for firms to borrow money. This, paired with concerns about future regulation, has spilled over into the bitcoin market.
At the start of December, the price of bitcoin and a handful of other significant digital assets plummeted. Cryptocurrencies began to fall again in early 2022, with Bitcoin’s price dropping to about $40,000 per coin by the end of January.
Fears of interest rate rises in the United States and China’s continuing crackdown on cryptocurrency are factors. There has also been talk that Russia would outright prohibit crypto enterprises.
What causes bitcoin’s extreme volatility?
Bitcoin, unlike conventional investments such as business stock, has no underlying asset.
Its value is determined by whether investors predict bitcoin will increase or decrease, not by how well a firm performs. This implies that price swings are solely dependent on people’s expectations of how it will perform.
As a consequence, even within a 24-hour period, the price of bitcoin might fluctuate dramatically. There have been many events that have caused the price to change:
The price of bitcoin has fallen due to a series of unfavorable reports and concerns of greater regulation. These are some of them:
Russia may impose a ban on bitcoin transactions.
Elon Musk said in May 2021 that Tesla will no longer accept bitcoin payments due to environmental concerns.
In June 2022 ending, the Chinese government will impose sanctions on bitcoin trade and mining.
Bitcoin is a hoax, according to Donald Trump, that is fighting with the dollar to be “the world’s currency.” in the next month.
Payments to cryptocurrency exchanges are blocked by UK banks.
Agents from the FBI confiscated tens of millions of dollars in bitcoin from criminals.
Binance, one of the major cryptocurrency exchanges, has been placed on the UK’s financial watchdog’s blacklist. HSBC and Santander are among the big banks that have followed suit.
IMF cautions — The IMF issued a warning in August against governments accepting cryptocurrencies as legal money, claiming that widespread adoption would jeopardize “macroeconomic stability” and jeopardize financial integrity.
Heist of crypto currency – Poly Network, a group of crypto hackers, stole $600 million in August before returning more than a third of it four days later, claiming they did it “for fun” and to “highlight the weakness” in the system before others could.
However, throughout the last year, there have been more good headlines that have driven the price higher:
In March 2021, Morgan Stanley became the first major US bank to provide wealthy customers access to bitcoin funds – but only up to 2.5 percent of their entire net worth.
Elon Musk indicated in June that Tesla would likely accept bitcoin payments again after it gets more than 50% of its electricity from renewable sources.
The posting of a job ad for a “digital currency and blockchain product lead” on Amazon has sparked suspicion that the company may soon accept bitcoin as payment.
El Salvador has declared bitcoin to be legal money. Other reports, such as the US central bank, the Federal Reserve, contemplating launching its own digital currency, are more ambiguous in terms of what it implies for bitcoin.
US President Joe Biden signed an executive order aimed at coordinating the US government’s operations on digital asset regulation. While many crypto enthusiasts believe that regulation is a bad thing,
others believe that this new executive order will aid in the growth of digital assets by ensuring that the appropriate consumer safeguards are in place.
Is bitcoin’s bubble about to burst?
When the price of an asset rises rapidly and reaches a new high, a collapse is more likely to occur. At the absolute least, there will be a correction, when the price returns to a more “normal” level.
Bitcoin looks to be in this condition at the moment, Nevertheless, bitcoin have been in existence for year but as we all know that cryptocurrency are full of surprises and anything can happen at anytime.
It took 11 years for bitcoin to reach $20,000 a coin after its birth, but just three weeks for the price to double.
2013 was a pivotal year for cryptocurrency investors. Bitcoin’s price rose from $13.40 at the beginning of the year to $1,156.10 in December, before plummeting to about $760 three days later.
By 2021, the price had increased by more than 700 percent in only a year.
It’s difficult to anticipate where it’ll go next.
Take a look at one Times Money Mentor reader’s crypto story: “In less than a year, Bitcoin’s rollercoaster swing has whisked me to an £8,500 profit.”
Will bitcoin make a comeback?
When it comes to investing, there are no guarantees. Bitcoin has the ability to fall and rise at the same time.
Concerns concerning cryptocurrencies include the following:
In nations such as China, there have been crackdowns.
Around the world, there are calls for more regulation.
Concerns about the environment
Its value is completely dependent on guesswork.
More regulation is perceived as a danger to crypto’s decentralization, which has an influence on pricing.
Bitcoin’s supporters emphasize its advantages:
Technology that has the potential to revolutionize industries
By eliminating the “middle man,” transactions become simpler and less expensive.
Global trading will be easier.
Transactions are kept more private.
Because it cannot be printed or confiscated, it is a secure store of value.
Bitcoin has been marketed as a gold substitute, implying that it may serve as a deflationary hedge.
Given its erratic nature, it’s feasible that bitcoin may regain popularity at some time in the future (perhaps weeks, months or even years down the line).
However, since no one has a crystal ball, it is hard to predict whether bitcoin will fall in the future.
Learn more about the best practices for investing in cryptocurrency (as well as the pitfalls to avoid).
Will bitcoin appreciate if the stock market plummets?
Certainly not. Bitcoin proponents perceive it as a portfolio diversifier, but it performed no better than equities during the onset of the coronavirus outbreak. This is due to panic selling by investors.
Bitcoin fell by more than 40% in the first two weeks of March 2020.
“All stock markets took an aggressive run down due of worries about Covid-19 at that time,” says Rosie Bullard, partner and portfolio manager at James Hambro & Partners.
“In a stock market reversal, it wasn’t exactly a store of value.”
“If you go back to March of last year, when the market crashed, bitcoin did not suddenly soar at that time.”
However, the performance of crypto assets during a stock market crash will be determined by the reason for the crash.
Most bitcoin investors think it would safeguard them in the event of an inflationary shock, similar as the one that occurred in 1974.
The collapse of the cryptocurrency market
Bitcoin, according to some analysts, is expected to plummet in the next months.
In November, Bitcoin hit a new all-time high of about $69,000. It’s currently worth less than $50,000, a drop of about 30% from its high. Bear markets, according to conventional knowledge, are defined as a drop of 20% or more from recent highs, yet bitcoin is known for its extreme volatility.
Carol Alexander, a finance professor at Sussex University, believes bitcoin will crash below $10,000 in 2022, wiping out all of the gains it has made in the previous year and a half.
“If I were an investor right now, I’d think about getting out of bitcoin as quickly as possible,” Alexander added, predicting that the price would likely plummet next year. Her negative prediction is based on the belief that bitcoin “has no intrinsic worth” and is more of a “toy” than an investment.