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Will Bitcoin Crash?

Will Bitcoin Crash?

Introduction

The cryptocurrency market is characterized by high volatility that results in booms and busts. Since the introduction of cryptocurrencies, we have seen plenty of swings. The first of these booms was witnessed when Bitcoin rose from as low as $0.003 in 2009 to about $150 by 2013. Soon after, the cryptocurrency fell 60% and rebounded to $1,150. However, it crashed and lost 85% to $175 by 2015. The biggest boom happened in 2017, when the price skyrocketed to over $20,000. The cycle of booms and busts continued with the cryptocurrency losing 85% of its value to $3,122 by the end of 2018.

This year, Bitcoin has risen to over $13,000 and is now hovering around $10,000. Having seen over 400% Bitcoin price increase in less than six months, many people are wondering – will Bitcoin drop again? And if it will – when will it crash? On the other side, others are wondering – will Bitcoin rise again?

The Rise of Bitcoin

If you had bought $100 worth of Bitcoins at 30 cents per Bitcoin in 2011, your coins would be worth $3,333,333 today. That’s just an estimate how much Bitcoin has risen over the years. Let’s explore the cryptocurrency’s journey to the top.

Bitcoin rise

Currently, Bitcoin is the most popular and the most dominant cryptocurrency with a market share of over 64 %. However, this was not always the case. Back in 2009 when Bitcoin was launched by its creator, Satoshi Nakamoto, the cryptocurrency was worth less than a cent. Even in 2010, when the concept of Bitcoin went viral, the unaware public still saw it as rubbish. The coin only gained significant value in 2011 when its price rose to above a dollar. For the next years, Bitcoin traded between $ and $30.

The big ride came in 2013 when the price broke the $100 mark. While it kept on fluctuating throughout the year, it rose up to a new high of $1,147 in December. By that time, Bitcoin and cryptocurrencies had gained more popularity, and you could spend them at many companies such as Microsoft and Dell. In the following three years, the coin’s value fluctuated between $300 and $1,200.

However, the rollercoaster came in 2017 when Bitcoin’s value rose by a dazzling 1,950% – rising from $970 to $19700 in the space of a year. On November 28, 2017, the coin crossed $10,000. At that point most people wondered – will Bitcoin keep going up? It didn’t take them long to get the answer – the price kept surging in December, rising to over $19,780.

Why did Bitcoin go up?

This huge Bitcoin price rise was caused by the increased popularity that was driven by the media. Other factors such as Japan’s legalization of BTC as an official payment method, increased acceptance by countries and authorities, adoption by big companies, and the introduction of SegWit, also contributed to the surge in BTC prices.

The Fall of Bitcoin

You don’t need to explore far to see how markets can quickly turn against the tide. For instance, after reaching its all-time high at the end of 2017, Bitcoin quickly tumbled from $19,000 to $6,000 in January 2018. This led a lot of people and analysts to wonder – will Bitcoin crash?

Over the years, Bitcoin has experienced many price swings. And in each case, many people would declare the fall the beginning of the end of Bitcoin. The first bust was experienced in 2011 after the peak of the first Bitcoin. The price went from $32 to $2 by November 2011, losing over 90 percent of its value. The price did not return to that price until 2013 when it went to a new high of $266. This gave way to the second major crash, with the coin dropping to $45 within days – a decline of 83%.

However, the crash that began in November 2013 is arguably the most famous in its history. Towards the end of the year, the price of Bitcoin was nearing $1,200, but reversed and started a bear run. In fact, on November 19, 2013 the price went from $755 to $378 in a single day. Why did Bitcoin crash? Well, there were many factors that played a role, but the major reason was China’s decision that Bitcoin was not a currency, and that it would begin to impose restrictions. While there were a few rebounds along the way, the bear market continued throughout 2014, bottoming out at around $177 in January 2015.

The latest slump in the series of Bitcoin crashes is the one that happened after Bitcoin had reached its all-time high in December 2017. This was also the year that BTC started to lose its dominance. At the beginning of the year, BTC’s dominance was about 85%, but by June 2017, its dominance stood at 38% with Ethereum (30%) having taken a significant chunk of its market share. But despite losing its dominance, it went on to reach an all-time high of over $20,000 before embarking on a strong bear run in 2018. By December 15, Bitcoin price had tumbled by more than 85% bottoming out at $3,122. This also had catastrophic consequences on other cryptocurrencies with many of them rendered worthless.

Bitcoins Evolution

Bitcoin, cryptocurrencies, and blockchain are an interesting technology, and their evolution has been fascinating. Ever since its inception, BTC has always been a highly controversial concept. In the early days, it had a bad reputation in the mainstream. But the once seen as a currency for nerds, drug dealers, and libertarians is today drawing millions of dollars from hedge funds. So, how did it shift to become a globally accepted concept?

Early Days

On October 31, 2008, an anonymous entity published a nine-page white paper titled “Bitcoin – A peer-to-peer electronic cash system.” On January 3, 2009, Satoshi Nakamoto successfully created the founding block of the Bitcoin blockchain, the Genesis Block. The first Bitcoin transaction happened on January 12, 2009, when Nakamoto sent 10 Bitcoins to the late computer scientist, Hal Finney, who was an early contributor to the project. However, the first Bitcoin exchange rate against the dollar was not set until October 5, 2009, when the New Liberty Standard set is as $1 equaled 2300.03 BTC. In 2010, about a million Bitcoins were mined, and the first transaction of BTC for physical goods happened on May 22, 2010, when Laszlo Hanyecz bought two pizzas for 10,000 BTC.

The Beginning of BTC Volatility

Bitcoin value hit $1 in 2011, marking the start of a tumultuous period for the cryptocurrency as its price skyrocketed to $31.91. This was the year that Bitcoin volatility and corrections were first experienced. In 2012, Bitcoin adoption increased as a number of platforms such as WikiLeaks and WordPress started accepting Bitcoins for payment.

First Halving & Silk Road

The first halving of Bitcoin rewards occurred on November 28, 2012, reducing block reward from 50 to 25 BTC after 210,000 blocks were mined. The price of Bitcoin went past the $200 mark or the first time in 2013 but dropped drastically before the fifth anniversary of the Bitcoin whitepaper after the famous dark web site, Silk Road was taken down and 26,000 BTC seized.

Second halving, BCH fork, & the big bull run

The second Bitcoin halving occurred on July 9, 2016, with the mining reward reducing to 12.5 BTC from 25 BTC. What followed in 2017 was the start of the biggest bull run in BTC history. On January 2, 2017, the coin breached the $1,000 mark and more people, media, and experts started talking about it. On August 1, 2017, a disagreement among the Bitcoin community members led to a hard fork from the original Bitcoin blockchain, giving birth to Bitcoin Cash. Bitcoin continued to surge and went on a mind-bending bull run taking its price to over $20,000.

The 2018 crypto crash

What happened to Bitcoin?

After seeing lofty highs in December 2017, the cryptocurrency embarked on a bear run in 2018. From the rumors of a cryptocurrency ban in South Korea to Facebook’s, and Twitter’s ban of crypto and ICO adverts, to SEC rejecting Bitcoin ETF proposals, there were many factors that pushed people to sell their coins, driving the price further down. This bear run continued up to December 15, 2018, to a low of $3,122.

What is going on with Bitcoin?

2019 has brought a glimmer of sunshine for the cryptocurrency market, with the value having recovered to a high of $13,700 by June. However, the price has recently dropped to between $9,200 and $10,500.

Will Bitcoin Crash Again?

Generally, history has a way of repeating itself. After the many busts that Bitcoin has had over the years, a lot of people are wondering – is Bitcoin going down again? However, Bitcoin has a lot of history, and this makes predicting its direction quite a challenge. Bitcoin enthusiasts, analysts, and industry figures have very different Bitcoin price predictions for both short-term and long-term. However, most experts agree that the run-up in its price is a bubble. Let’s take a look at a few opinions by experts and Bitcoin enthusiasts.

CCN

Will Bitcoin price drop again?

According to CCN, Bitcoin has surged so far and so rapidly, and therefore, a brutal crash is imminent. According to them, charts show the current parabolic burst is a mini version of the 2018 bear market. CCN expects a correction in Bitcoin’s dominance index, and this will favor other cryptocurrencies.

Bitcoin Dominance Index

 

Parabolic burst comparison between 2017 and 2019

In both scenarios, Bitcoin rises rapidly, and then volume dwindles as investors begin to lose interest. Therefore, sellers begin to distribute positions to lock their profits.

Forbes

Forbes answers the question “will Bitcoin crash?” by citing the economic bubble burst. According to Forbes, an economic bubble burst happens in 3 stages:

  1. A period of slow and steady growth
  2. Irrational period, where everyone is looking to make a quick profit
  3. The crash, as everyone tries to escape

MarketWatch

Could Bitcoin collapse?

According to Mark Hulbert from MarketWatch, there’s an 80% chance that Bitcoin will crash in coming months. Hulbert based his prediction on a study, “Bubbles for Fama,” by two Harvard professors Robin Greenwood and Andrei Shleifer, and a Ph.D. candidate, Yang You. According to Hulbert, Bitcoin is likely to collapse solely because of its parabolic price rise.

The researchers found that when a security’s prior run-up surpasses certain thresholds, the probability of a crash happening increases. There’s a 50% probability when a security’s run-up is 100% and 80% probability when the price increase by at least 150%. According to Hulbert, Bitcoin qualifies as it has risen over 270% since the beginning of the year alone.

Bloomberg

Is a Bitcoin crash coming?

Aaron Brown from Bloomberg also gives his views on the question – will Bitcoin crash again? He argues that Bitcoin could rise to between $60,000 and $400,000 before crashing 85% again if the pattern of the 2013 and 2015 rallies repeats.

Saxo Bank

Will Bitcoin crash again 2020? Saxo Bank believes that Bitcoin will rise above $60,000 in 2019. However, they also think that Bitcoin will crash and lose over 98% of its value the following year.

Why Bitcoin will crash: The Saxo Bank analysts believe that new cryptocurrency regulations from governments will drive the crash.

David Garrity, CEO of VA Research Bitcoin projection

David Garrity predicted in January 2018 that Bitcoin would crash as low as $5,000 in 2018. He also predicted that the coin would rebound back to almost $20,000 by the end of 2019.

Spencer Bogart, Blockchain Capital Partner

Why is Bitcoin rising so fast?

According to Spenser, the reason why Bitcoin is going up is because of the increase in large investments made by big companies and investment banks. He predicts that Bitcoin’s value will rise to more than $50,000

Bobby Lee, CEO of BTCC

Will Bitcoin go back up?

Bobby Lee predicted the price of Bitcoin to drop in 2018 and reach below $2,500 by January 2019. He also claimed that following the crash, the coin would pick up in 2020 and reach $333,000 in 2021 before crashing to $41,000 in 2023.

Tom Lee Bitcoin projected value

Will Bitcoin increase in value or come back down?

Fundstrat Global Advisor managing partner, Tom Lee, had predicted that 2019 would be a positive year for BTC, and its price would hit $10,000. Having already attained the mark, Lee now believes BTC will get to $40,000 before the end of 2019.

Bitcoin Risks

While Bitcoin is an exciting technology, it’s not without risks. In fact, we have already seen its biggest risk – price volatility. In no particular order, here are the main risks associated with Bitcoin.

  • Price volatility

The price of Bitcoin keeps fluctuating and can change a lot in value and in a very short time. In fact, we’ve seen instances when Bitcoin has lost half its value in just a day. This high volatility means that you could incur a massive loss in case Bitcoin goes down.

  • Cybertheft and security

There have been numerous cases of hacking of exchanges such as Mt. Gox, and recently, Binance. Other than losing your Bitcoins, such attacks often have a negative effect on the price of BTC, and can easily lead to a Bitcoin crash. Your Bitcoins could also be stolen from your digital wallet if an attacker gains access to your private secret key.

  • Lack of consumer protection

Bitcoins are digitally mined, exchanged, and stored. Without the blockchain, they are worth nothing. And unlike other forms of currency, Bitcoin is not backed by any collateral or entity. This means there’s no consumer protection, and hence, investors are vulnerable to fraud, cyberattacks, and system failure.

  • Technology risks

Technology develops fast and uncontrollably. Despite its popularity, Bitcoin also faces a real technological risk in the form of competition from other more advanced cryptocurrencies. For instance, in 2017, BTC lost its market share from 85% to 38% due to the growth of other cryptocurrencies such as Ethereum.

  • Regulation

Regulation has been a contentious issue in cryptocurrencies because the currencies operate in a decentralized platform. Therefore, the absence of a unified cryptocurrency regulation only increases the uncertainty factor surrounding the future of crypto. Government agencies are wary of the use of Bitcoin for speculation and illegal financial transactions, and some governments have actually gone on to ban the use or trade of cryptocurrencies such as China.

Bitcoin Value Change

“Is Bitcoin going to crash?” “Why is Bitcoin going up?” “Will Bitcoin keep rising?”

Well, these are questions we hear a lot. The value of Bitcoin changes every day, depending on how valuable the market thinks it is. When more people want to buy Bitcoin, its value will rise and vice versa.

How Bitcoin value has changed since its inception

As we have already mentioned, when Bitcoin started in 2009, its value was less than a cent. Eight years later, its value was over $20,000. Below is a snippet of how the value changed over the years.

  • 2010 – $0.003
  • 2011 – Reached $1 and hit a new high of $31 in June
  • 2012 – Had a slow year-long rise from $2 to $13
  • 2013 – Crossed the $100 mark as well as the $1,000, going all the way to $1,242 in November
  • 2014 –Ranged between $550 and $1,000, then fell to $340
  • 2015 – Fell to $200 and later spiked to $504
  • 2016 – Spiked to $750, then stabilized around $600 – $780
  • 2017 – Crossed $1,000 in January, fell to $750, then broke the high of $1,242. From there, rose to a new high of $19,783 by December 17.
  • 2018 – Crashed and went down to a low of $3,122 by December 15.
  • 2019 – Spiked to $13,796 by June. At the time of writing, the value has dropped to $10,096.

 

So, where is Bitcoin going? – Will it continue to rise or will it crash today?

Bitcoin has made several attempts to break the high it hit in June without avail and has dropped to $10,096. Some experts believe that if it can break the point it reached in June, it can go all the way to the 2017 all-time high. However, most believe the lack of momentum is a sign that Bitcoin will crash to lows of between $6,500 and $8,000 before rebounding.

How low can Bitcoin go?

At this point, most experts believe that it will bottom out around $6,500 to $8,000. However, there are a few who still think Bitcoin will go down below its December 2018 low ($3,122), with some claiming that Bitcoin will crash to zero.

Why is Bitcoin losing value?

Recently, Bitcoin has faced a lot of negative sentiments. From Donald Trump slamming it on Twitter to India’s proposal to ban Bitcoin, there seems to be a global war on Bitcoin. Unfortunately, people tend to focus more on negative news than the positive. This explains why Bitcoin is crashing.

Why does Bitcoin value change?

No one factor single-handedly determines if the value of Bitcoins go up or down. Instead, changes in its value are driven by a multitude of factors, which include:

  • Positive and negative news
  • Regulations
  • Adoption and utility
  • Holders of large amounts (Bitcoin whales)
  • General public’s knowledge and perception about Bitcoin

Conclusion

Will Bitcoin crash again? What is the future of Bitcoin?

Well, at this point you’ve already seen how volatile the price of cryptocurrencies can be. This makes it extremely hard to predict if Bitcoin will go down or up. Your best bet is to consider the opinions of expert economists and other professionals in the field. While different experts and Bitcoin enthusiasts seem to have different opinions on where Bitcoin is headed as well as the future of Bitcoin, most of them agree that the question should not be “will Bitcoin drop?” but rather “when is Bitcoin going to crash and to what extent?”

So, when will Bitcoin drop? Will BTC crash further in 2019, 2020, or 2021?

No one knows when Bitcoin will go down again. What most experts agree is that at some point, Bitcoin has to crash. And going by its history, it’s highly likely that we will continue to witness these booms and busts. Whether it’s when it hits another all-time high or after a parabolic rise – no one can be 100% sure. It’s all mostly a case of educated speculation.

Sources:

https://www.forbes.com/sites/forbesfinancecouncil/2018/12/05/the-top-10-risks-of-bitcoin-investing-and-how-to-avoid-them/#770872032407

https://www.finextra.com/blogposting/17390/the-main-risks-of-investing-in-bitcoin

https://en.bitcoinwiki.org/wiki/Bitcoin_history

https://www.ccn.com/bitcoin-price-charts-prove-btc-will-suffer-a-brutal-crash/

https://charts.cointrader.pro/charts.html?coin=BITCOIN%3ADOMINANCE

https://www.investopedia.com/articles/investing/123015/if-you-had-purchased-100-bitcoins-2011.asp

https://cointelegraph.com/explained/the-biggest-rises-and-falls-of-bitcoin-explained

https://bitcoin.org/bitcoin.pdf

https://bitcointalk.org/index.php?topic=137.msg1195#msg1195

https://cointelegraph.com/news/police-confiscate-11000-bitcoin-wallets-shut-down-dark-web-site

https://www.facebook.com/business/news/new-ads-policy-improving-integrity-and-security-of-financial-product-and-services-ads

https://www.cnbc.com/2018/03/26/twitter-bans-cryptocurrency-advertising-joining-other-tech-giants-in-crackdown.html

https://www.marketwatch.com/story/bitcoin-is-very-likely-to-crash-soon-research-shows-2019-06-27

https://www.sciencedirect.com/science/article/pii/S0304405X1830254X

https://www.bloomberg.com/opinion/articles/2019-06-13/will-bitcoin-crash-again-next-price-cycle-could-be-tamer-ride

https://www.express.co.uk/finance/city/908393/Bitcoin-price-news-Ripple-ethereum-Blockchain-cryptocurrency-latest-2018

https://bitcoinist.com/bitcoin-to-40k-in-the-next-few-months-says-tom-lee/

https://www.newsbtc.com/2019/01/29/craig-wright-calvin-ayre-bitcoin-zero/

https://twitter.com/realDonaldTrump/status/1149472282584072192

https://www.ccn.com/news/indian-regulators-propose-complete-cryptocurrency-ban/2019/07/22/

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Fat Finger

Fat Finger

Hello everyone!

My name is Phat Fin Ge, but most people just call me Fat Finger or Mr. Finger.

Many years ago, I was a trader on the Hong Kong Stock Exchange. I became so successful that my company moved me to their offices on Wall Street. The bull market was strong, but my trading gains always outperformed market averages, until that fateful day.

On October 28th, 1929, I tried to take some profits after Charles Whitney had propped up the prices of US Steel. I was trying to sell 10,000 shares, but my fat finger pressed an extra key twice. My sell order ended up being for 1,290,000 shares. Before I could tell anyone it was an error, everyone panicked and the whole market starting heading down. The next day was the biggest stock market crash ever. In early 1930, I was banned from trading for 85 years.

I went back to Hong Kong to work at my family's goldfish store. Please come and visit us at Phat Goldfish in Kowloon, only a 3 minute walk from the C2 MTR entrance.

I thought everyone would forget about me and planned to quietly return to trading in 2015. To my horror, any error in quantity or price which cause a problem kept getting blamed on Fat Finger, even when it was a mix up and not an extra key being pressed. For example, an error by a seller on the Tokyo Stock Exchange was to sell 610,000 shares at ¥6 instead of 6 shares at ¥610,000. That had nothing to do with me or with how fat the trader's finger was, but everyone kept yelling, "Fat Finger! Fat Finger!" In 2016, people blamed a fat finger for a 6% drop in the GBP. It really was a combination of many things, none to do with me or anyone else who had a wider than average finger.

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