Bitcoin: Will it crash or recover again?

Bitcoin is highly volatile since sometimes its prices rise or fall thousands of dollars within days. What makes bitcoin fluctuate rapidly? Will it crash or recover again in the future?

Bitcoin’s price rose back above $36,500 Wednesday morning, extending its recovery after falling below $34,000 for the first time since July 2021.

Since falling below $40,000 last Thursday, bitcoin’s price has been on a roller coaster ride. After the release of the Federal Reserve’s research on a prospective government-issued digital currency, the stock market witnessed the worst week in over two years. Bitcoin also saw a significant decrease.

Table of Contents

1. Why is the market crashing?

Bitcoin has recently bounced up and down sharply in response to several good and bad news. However, not only cryptocurrency but the stock market faced turmoil at the end of 2021. The value of bitcoin and several other famous digital currencies plummeted in December. Cryptocurrencies plunged once again in early 2022. The negative news is attributed to the scenario. There is also growing concern regarding the rise in the U.S. interest rate and China’s cryptocurrencies embargo. Russia may ban cryptocurrency mining and trading in the country.

2. Why is bitcoin so erratic?

Various events have caused prices to bounce up and down.
Anti-cryptocurrency activities
  • Jan 2022, Bitcoin’s hashrate, a key metric when assessing blockchain strength, hit an all-time high.
  • In Dec 2021, Donald Trump insisted on the world currency, US dollars, while describing bitcoin as a scam.
  • At the same time, FBI agents seized roughly $2.3 million in cryptocurrency tied to ransomware attacks of dollars in bitcoin from criminals.
  • Aug 2021, IMF also stated cryptocurrency would threaten the macroeconomy.
  • June 2021, the Chinese government banned trading and mining bitcoin.
  • At the same time, UK banks, including Lloyds Banking Group, HSBC, Barclays, stopped their customers from making payments to several crypto trading platforms. One of the biggest cryptocurrency exchanges, Binance, has been blacklisted by UK regulators, followed by banks.
  • In May 2021, Elon Musk announced that he suspended vehicle purchases using bitcoin due to environmental issues.
  • Poly Network hacker gave back more than $600 million in stolen crypto after stealing for fun.

Cryptocurrency supporters

  • Jan 2022, Bitcoin’s hashrate, a key metric when assessing blockchain strength, hit an all-time high.
  • December 2021, 90% of the total bitcoin supply was recorded to be mined over the past 12 years.
  • At the same time, FBI agents seized roughly $2.3 million in cryptocurrency tied to ransomware attacks of dollars in bitcoin from criminals.
  • October 2021, the ProShares futures-based bitcoin ETF made its market debut on the New York Stock Exchange under the ticker “BITO”.
  • September 2021, El Salvador approved bitcoin (BTC) as legal tender.
  • June 2021, Elon Mush said that Tesla would resume accepting bitcoin if the percentage of renewable energy usage is most likely at or above 50% in bitcoin mining, after banning the use of it.
  • March 2021, Morgan Stanley became the first major US bank to provide wealthy clients with access to bitcoin funds.

3. Will the bitcoin bubble collapse?

Stock and cryptocurrency markets are likely to adjust themselves to a “reasonable” level. In other words, after skyrocketing, the prices will plummet soon. What is going on in the cryptocurrency market is a good sample. Nevertheless, nobody can define the “reasonable” price of a property.

Bitcoin had a price of zero when it was introduced in 2009. Then, Bitcoin’s price bottomed out at $2.05 by mid-November after reaching a peak of $29.60 in June 2010. The following year, its price rose to $13.50 in August. 2013 witnessed a significant pump and dump in its price, reaching $1,237.55 in Dec and halved its price three days later. Bitcoin’s prices were unremarkable in 2014 and 2015.

Prices increased gradually to $900 in 2016, followed by $2,000 in May 2017 and a record high of $19,345 at the end of the year. Again, bitcoin’s prices were on the rollercoaster in the next two years, fluctuating from $6,635 to $10,000. The COVID-19 pandemic enabled Bitcoin to increase its price as there were emerging fears of the global economy, reaching just below $29,000 in December 2020, increasing 416% over 12 months.

Last year, the price surpassed $40,000 and $60,000 when Coinbase went public. Eventually, bitcoin smashed its all-time record high of more than $63,000 in April and $67,549.14 in July after wide fluctuations.

Last year, the price surpassed $40,000 and $60,000 when Coinbase went public. Eventually, bitcoin smashed its all-time record high of more than $63,000 in April and $67,549.14 in July after wide fluctuations.

As the long history of ups and downs in its price, the future price is quite unpredictable.

4. What will bitcoin prices look like if the stock market crashes?

According to the report of SeekingAlpha.com, bitcoin and other cryptocurrencies have become more entwined with markets, with bitcoin alone near its highest correlation with the stock market since September 2020. That means when the stock market goes down, which it most definitely has since the kickoff of 2022, so does bitcoin.

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