The search term “Bitcoin Crash” is popular – here’s the reason
Last year, the word “crypto” was popular all over the internet as the crypto market generally flourished.
Now, however, it seems that the luck with digital coins has diminished as cryptocurrencies have slipped into a serious bear market. Bloomberg recently reported that although short-term investors did not waste time dumping their holdings, even the old ones are now leaving the scene.
The recent Bitcoin (BTC) crash caused the asset price to fall as low as $ 17,000, the lowest price since the end of 2020. Reflecting the general atmosphere of uncertainty among investors in the cryptocurrency market, “Bitcoin is Dead” is starting to trend again, at least according to the data from Google Trends.
But while downturns can generally be part of the crypto markets, things continue to look bleak for crypto.
What triggered the recent Bitcoin crash?
Bitcoin has fallen almost 70% from the record in November, but it all started in March when CNBC reported that the Federal Reserve approved its first interest rate hike in three years. The unique action was a major turning point, putting downward pressure on risk assets such as Bitcoin. Meanwhile, a number of other events soon followed that also affected the crash of Bitcoin, including Russia’s invasion of Ukraine and the Terra crash.
Rob Schmitt, CEO of infrastructure provider Toucan, told Cointelegraph:
A combination of macro headwinds, such as rising interest rates and geopolitical uncertainty, has triggered a broader market downturn that has caused a major delegation event in crypto markets. BTC, which caused a price crash. “
The first digital global digital payment company CEO Vincent Chok insisted that the Luna Classic collapse (LUNC) should be the main cause of the crash. He told the Cointelegraph:
“This is part of the normal market cycle. The primary trigger was not geopolitical conflict, but the LUNC collapse and the systemic risks associated with the large exposure to this token.”
The collapse triggered margin requirements for hedge funds and defined liquidity positions. Chok added that it is part of the super cycle of the industry, an avoidance of the bull run. Something had to be fixed sooner or later, he added.
Crypto will survive
Bitcoin has been written off as dead at least 458 times before. But each of these times it has managed to come back to life.
Kevin Owocki, founder of Gitcoin DAO – a platform for funding open source Web3 projects – told Cointelegraph:
“Bitcoin has been declared dead hundreds of times before, and so far these comments have always been wrong. If the past is any guide, Bitcoin is not dead. I do not want to go into price forecasts, but my focus has always been on the future of what Web3 can build and how these tools can provide solutions to global problems facing humanity. ”
We have been through “winters” before where the value of digital assets fell to unpleasant levels, but we have seen that the larger crypto community comes out stronger and more resilient from these periods than before. I think we will get through this, and on the other hand, the products and assets that have survived will be value creators not only for Web3, but beyond, Owocki added.
Furthermore, Schmitt also claimed that “a temporary fall in the price does not significantly affect Bitcoin.” He explained how Bitcoin has had to go through several major falls in the past.
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Several other calculations on the chain suggest that Bitcoin will most likely come out of its current situation. One such important calculation is the 200-week moving average (WMA).
For a long time, the moving average has been a credible indicator of the BTC price. Previously, at every point where Bitcoin has hit 200 WMA, it came back completely. A close look at what happened between 2015 and 2020 in the chart below provides insight into this statement.
There are times when Bitcoin dived a little below 200-WMA, but it never stayed there too long.
So since Bitcoin is currently trading in a very close range to the 200-WMA, there may be reason to believe that Bitcoin is not dead. In fact, an upturn is rightly expected soon.
The impact of crypto on the economy
Institutional involvement in the crypto market’s recent bull cycle has triggered fears that the broader economy could potentially be affected.
Many companies have had to lay off a significant number of their employees, and others are looking at potential insolvency. In addition, a recent Pew Research Center survey found that around 16% of American adults have been involved in cryptocurrency in some way. So to some extent there is a certain national exposure to the current situation in the crypto market.
However, not everyone believes that the crypto market situation will affect the broader economy. In an interview with CNBC, Joshua Gans, an economist at the University of Toronto, said:
“People do not really use crypto as collateral for debt in the real world. Without it, this is just a lot of paper loss. So this is low on the list of problems for the economy. “
Despite the gloomy outlook for the crypto market at the moment, crypto continues to see massive adoption across the board. With the increased involvement of sports organizations, individuals, business institutions and even states and federal governments, there is a clear trend of crypto adoption.
According to the US-based news agency Axios, downloads of cryptocurrencies are improving on an annual basis, and higher media coverage should be attributed. While there was a growth of 64% in 2020, last year there was an even more impressive increase of 400% in the number of downloaded cryptocurrencies.
Crypto deals with sports brands, teams and leagues increased by more than 100% in 2021 and are expected to reach $ 5 billion over the next four years.
How long until BTC returns?
Based on previous trends in the crypto market, it could take weeks, months or possibly years to reverse the current situation, and while the Bitcoin price is currently suffering, it should not take away the fact that it is still up 31,437% over the last nine years . In fact, it was currently more than double the price two years ago. Owocki sa:
At Gitcoin Holdings, we know that it may take some time for the general market to recover – but we do not know exactly how long or which assets will recover. It could be five weeks, it could be five years. We are focused on to create value in the long run. ”
Although there is no exact time frame for when Bitcoin will resume an upward trend, it certainly looks like a temporary fall in prices will ultimately not affect the rapid growth in usage, adoption and prices of cryptocurrencies in the long run.
Owocki believes that the development of the internet can be seen through the lens of nature’s evolution. Instead of natural selection, “we have a market selection.” He said it was a “Cambrian explosion” of opportunities created by the launch of Bitcoin and several forks of BTC.
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Then came Ethereum, and a rich layer-2 ecosystem, decentralized finance, non-fungible tokens, crowdfunding tools, decentralized autonomous organizations, and alternative layer-1 networks.
“As this Cambrian explosion works its way through cycles of greed and fear, growing and dying projects, and through it all the heartbeats of innovation continue to pulsate. I can not wait to accelerate this development until we get to the Web3 equivalent of keystone species such as dolphins, humans, forests or mycelium networks, ”Owocki added.
Gitcoin DAO founder does not believe that BTC or cryptocurrency is big enough to kill an economy. Throughout history, Owocki added, there have always been bear markets and bull markets. He says that Web3 will appear on the other side of this more strongly, and will contribute even greater value to the world economy than ever before.
