What is the possibility of a Bitcoin crash?
With all the hype around cryptocurrency, some people are wondering if a bitcoin crash will soon happen. If you’ve been following the trends, you’ve heard that the market is booming right now. Even joke tokens like Shiba Inu (SHIB) and Dogecoin (DOGE) are topping the crypto list! This means smooth sailing for bitcoin and the other cryptos, right?
We can’t be sure about that because the cryptocurrency market is well-known for dramatic ups and downs. Perhaps the crypto flight will crash soon, or maybe it will keep on skyrocketing. Which one is most likely to happen in the coming years? If you’re a crypto investor, you might be anxious to find out!
That’s why we will talk about both scenarios: a bitcoin crash and bitcoin growth. We will explore the factors that could cause them and then figure out which one is most likely. More importantly, we will explain what this means for crypto investors and how they should prepare. If you don’t have any cryptos, we also have some tips for you later.
How could a bitcoin crash happen?
If you’re holding any investments, you want the prices to keep going up. After all, investors are always on the lookout for more profits. Can the prices fly high forever?
The short answer is, “No.” We’ve already talked about the most recent bitcoin crash from a few months ago, and meanwhile, the stock market crashed in 2008.
Experts warn that the stock market is due for a correction, meaning the prices may drop soon. Worse, this might take the crypto market with it too.
Before we continue, when we say “bitcoin crash,” it’s not just about a bitcoin price crash. Instead, it’s about a crypto crash that involves crypto prices crashing significantly.
It’s called a bitcoin crash because more people are familiar with bitcoin. Now that we’ve cleared that up, here are the things that could cause this event:
- Governments – Various countries are trying to create CBDCs or Central Bank Digital Currencies to replace cryptocurrencies. What’s more, many of them are cracking down on these digital assets, especially in China. If they stop people from using bitcoin, the entire cryptocurrency market may crash eventually.
- Quantum computers – Blockchain powers all cryptos, and they’re secure because we don’t have computers that can take down all its nodes. That may change soon as China claims to have created a computer that beats Google uses. If it’s that powerful, it might cause a flash crash for all cryptos.
Why is a bitcoin crash unlikely?
The bitcoin hit a new all-time high on October 20, 2021, reaching $66,930.39. What’s more, the other cryptos have been going up recently, like Axie Infinity (AXS) and Decentraland (MANA)!!
Thanks to Elon Musk, meme cryptos Dogecoin and Shiba Inu coin have been rising too. We’ve seen more cryptocurrencies traded lately!
That’s because more people nowadays prefer bitcoin over gold as an inflation hedge. Unlike the latter, it’s more detached from regular market forces.
Here are the other reasons why the crypto market is likely to perform well in the long term:
- Easy crypto spending – Nowadays, you can spend cryptocurrencies much easier. Many countries have bitcoin ATMs that let you use it as cash or credit cards. Also, you have various apps like PayPal that help you transfer it.
- Connect businesses worldwide – Crypto lets people send and receive money from overseas without pesky transaction fees. Some of the best examples include Stellar Lumens (XLM) and Ripple (XRP).
- Eco-friendly bitcoin – People have been pointing out how much energy cryptos use. Fortunately, El Salvador may solve this soon with its geothermal bitcoin mining station. It already mined its first coins recently!
- Using bitcoin offline – Soon, you might not even need electricity or the internet to use bitcoin because of the Blockstream network.
- Multiple uses – Crypto provides video games that allow players to make money while playing. Also, it lets artists make money with the help of NFTs.
- Always improving – Cryptos are always finding new ways to improve. For example, Bitcoin now uses the Lightning Network and the Taproot upgrade. They are also the reason why the price of bitcoin has been increasing lately.
Together, these factors could make sure that people are still using cryptos in the future. As long as it has users, it’s more likely to stay with us in the long run.
Read More: The Bitcoin Crash Of Early 2021
What should crypto investors do?
We cannot say for sure which of these will happen. Still, there are a lot of things you could do in response. If you don’t have cryptos or any other assets yet, this might be the time to get some!
Having no investments is the worst position to be in right now. Before the COVID-19 pandemic, people should take care of their finances by having stocks or other assets.
These could be a source of passive income. In turn, they could help you afford more stuff and even save for retirement. Or you could sell them for a quick profit.
Let’s say you followed our advice, and you’re now an investor of crypto or other assets.
Here are the things you should do in response to a potential bitcoin crash:
- Don’t panic sell – Some people let go of their cryptos at the sight of any price drop. This is a bad idea, especially for cryptos, since the value moves so much. It’s not a good idea to keep holding a bad investment, but make sure it’s for the right reasons. Otherwise, you might be letting it go right before it skyrockets.
- Buy the dip – People always think price crashes are bad, but those are opportunities for the savvy investor. It’s best to buy a good asset while its value is down. Once it gets back up, you’re likely to earn more money. A bitcoin crash just gives huge discounts for various cryptos.
- Aim for use-cases – Get the coins that have use-cases that people need, so they’re sure to resist a crash. For example, Binance Coin (BNB) is Binance’s native cryptocurrency. Since it’s the biggest cryptocurrency exchange globally, people are likely to hold on to BNB during a crash.
- Diversify – Have various kinds of assets, so you’re likely to have some that will grow in value. Those other assets could make up for the failing ones. If a bitcoin crash does happen, your stocks or bonds may still grow in value, and even better, they could give you more dividends.
It's unlikely that #Bitcoin will crash below $47,000 in the short term.
The IOMAP points to strong support between $50.6k to $47.2k, where previously 2.28m addresses bought a total of 841K $BTC. pic.twitter.com/VCPPUY1Lin
— IntoTheBlock (@intotheblock) March 11, 2021
If you don’t have money to spare, you may want to get a side gig. Nowadays, you can get many jobs that you can do at home, which is a great way to spend your free time too.
Related Articles
Final thoughts
You can easily become a crypto investor, and creating a crypto exchange account only takes a few steps. If not, it’s easy to invest in other assets too.
This article was intended to inform you about cryptos. Look into them further before investing. Make sure you have a solid plan before you buy an asset.
You can check the latest bitcoin updates online. Also, check our other Inquirer USA articles to learn more about investing and other trends.
