For the most part, bitcoin investors have had a bumpy ride over the years. They have had to cope with various difficulties influencing its environment, ranging from innumerable scams and fraudsters to a lack of regulation that adds to its volatility, aside from everyday volatility, where double-digit price rises and reductions are common. Despite this, there have been occasions when cryptocurrency price variations have outstripped even their usual volatile swings, resulting in massive price bubbles.
Since its meteoric rise in popularity in 2017, Bitcoin’s market valuation has risen from around one billion dollars in 2013 to many times that amount, according to Statista. So, what would happen if Bitcoin crashed? What would be the ramifications? For comparison, the 2008 financial crisis cost the United States $12.8 trillion. At the same time, about 1000 people own 40% of all Bitcoins. Because much of the existing international financial system has stayed away from Bitcoin, the remaining 60% is largely made up of speculative private investors.
This suggests that the collapse of Bitcoin will have a minor influence on the global economy. So, where will it make a difference? While a Bitcoin meltdown would not have a significant influence on the global economy, it would be a disaster for the crypto economy. The great majority of cryptocurrency projects rely on Bitcoin to make money, and while many of them have their own technology, most of them aren’t mature or well-known enough to thrive on their own. This implies that the remaining crypto-economy, estimated to be worth another $150 billion, will diminish until only the most powerful enterprises with real-world usefulness remain.
This raises the question of whether or not this is a negative thing. The Internet is now a robust marketplace that supports many of the world’s most important industries. In other words, if Bitcoin fails, many individual investors will lose money, and blood, sweat, and tears will be shed. A slew of Bitcoin whales would be having a miserable day. But life would carry on, and would it be a thing in the end? Speculative investment, on the other hand, is a haven for con artists and get-rich-quick scams. If Bitcoin fails, the firms that have significant community support and are on course to meet their goals will usher in a new and more stable age of cryptocurrency.
What to do?
Keep your cool
Whether you decide to sell your bitcoins or see a fall as an opportunity to buy more, you must remain cool. Making emotional decisions, especially while trading, seldom delivers favourable results. So, before you jump into the cryptocurrency market in a frenzy, consider why you’re trading in the first place.
Analyse
Fundamental news, rather than price action or rumour, might have shifted market sentiment. You must analyse the situation before deciding on your next line of action.
Consider your next action
If the risks appear to be opportunities disguised, you may choose to hold your position or take advantage of a price reduction to increase your investment. If you believe the risks will continue to exist, if not intensify, you should reduce your losses and leave the game for the time being. If you’re having difficulties predicting the future, consider dividing the difference and selling some of your investment today while still having upside tomorrow. You can try investing in crypto with Bitcoin Revolution.
What to remember
Although the current drop is alarming, the good news is that cryptocurrencies have seen similar drops in the past. According to Forbes, Bitcoin has lost over 80% of its value on many occasions. Yet, it has always rebounded. Despite losing almost 95% of its value in 2018, Ethereum was able to recover. While past success is no guarantee of future outcomes, the most well-known companies in the crypto industry have already demonstrated their ability to endure volatility. Again, this isn’t a guarantee that they’ll always bounce back, but both of these cryptocurrencies have been through a lot worse.
The key to building money, like with any investment, is to stick with it for the long haul. Cryptocurrency is still finding its footing, and even when it does, widespread acceptance might take years, if not decades. It is the best incentive to invest if you truly believe in cryptocurrency’s long-term potential. If you feel it has a bright future, you should be prepared to hold on to your assets as long as possible, despite any short-term volatility.
Many more cryptocurrency crashes are almost expected to occur in the future. It doesn’t matter how it works right now as long as you maintain your eye on the big picture.