The history of the Bitcoin crises… Is it booming again, or is it a major hoax?

The value of Bitcoin has fallen over the past two days to below $19,000, according to CoinBase, a cryptocurrency exchange.

Thus, the first digital currency – in terms of market value – has fallen by 60% since it recorded its highest level last November.

In an article published by the British Financial Times, writer David Hindley said that owners of this cryptocurrency are accustomed to the volatile nature of the industry. The newspaper touched on the boom and bust periods in the Bitcoin currency previously, to see if history is repeating itself.

Japanese boom and bust

April 2017 To March 2018

Prior to 2017, bitcoin was trading at less than a thousand dollars. But on New Year’s Eve 2017, the value of this cryptocurrency crossed the $1,000 mark and reached $20,000 before the end of the year.

This boom was thanks to the rush of investors first in Japan, then in South Korea. After Japan authorized trading on 11 crypto exchanges in April 2017, the country accounted for about 40% of daily trading activity worldwide. But this boom was soon followed by a period of collapse.

First Bitcoin Winter

March 2018 To May 2019

Between March 2018 and May 2019, Bitcoin traded at less than $10,000, which has prompted many critics and regulators to question its future. For example, traders and institutions in London have been wary about dealing with cryptocurrencies, due to concerns about fraud, financial crime and other reputational risks.

Selling Bitcoin whales in early 2018 raised concerns about the impact of major investors on the cryptocurrency’s price. In April 2018, about 1,600 bitcoin wallets contained about a third of all bitcoins available, of which about 100 were wallets with more than 10,000 bitcoins.

The winter of cryptocurrencies deepened with the creation of new versions of Bitcoin, which caused its price to fall to its lowest level since the beginning of 2017, but in June of the same year, Bitcoin got a positive boost from Facebook when it revealed – the largest social networking platform in the world. The world- about its plans to launch its own digital currency, “Libra”. Although the Libra plan remained a dead letter, the news that Facebook was planning to enter the sector increased confidence in the sustainability of Bitcoin.

pandemic boom

October 2020 to April 2021

After the first shock to this market due to the outbreak of the Corona pandemic, the Bitcoin currency started to rise again, after the company “PayPal” announced that it would allow users to hold cryptocurrencies. During the shutdown, retail investors started betting on a bitcoin rally. Within 6 months, its value had doubled from less than $12,000 to more than $63,000.

The sharp rise of this market caught the attention of institutional investors, and this bullish wave culminated with the initial public offering of CoinBase, the largest crypto exchange, which opened with a valuation of nearly $76 billion on the Nasdaq in April 2021. long lasting; China banned cryptocurrency mining and the use of computers to solve equations to earn cryptocurrency in September 2021, and then the United States and Europe again raised speculation about their regulation.

Bitcoin Crisis With Stock Markets Falling

July 2021 until today

The writer says that Bitcoin advocates maintain that it is a hedge against inflation and volatility in other markets. In October 2021, the popularity of this cryptocurrency grew with the launch of ETFs, allowing investors to track its prices without holding any Bitcoin directly. Days after ETFs resumed their activity, Bitcoin reached an all-time high of $69,000.

What will come next?

Previous Bitcoin booms were backed by small investors who entered the market hoping to make a bumper profit within a short period of time. Subsequent crashes occurred when regulators or the broader market expressed concerns about the risks in the sector and raised bitcoin holders to worry about how their money would be spent.

According to Katie Martin, a columnist for the Financial Times, Bitcoin is “the most speculative asset on the planet, perhaps even the most speculative of all”.

The writer concludes by saying that it is still largely unclear how any regulation in the context of the currency market will succeed in keeping pace with the practical realities of the industry. But if regulators succeed in crafting it, they will help the cryptocurrency industry build more confidence and, perhaps, eventually achieve some stability.

The concerns of the US economy in early December 2021 about rising inflation and interest rates in the future led to a significant drop in the price of Bitcoin. Over the course of the following months, bitcoin plummeted as US tech stocks plummeted. As inflation worsened this year, Bitcoin fell further, and last June experienced its worst week since 2020.

In an article published by The New York Times, Paul Krugman wrote that crypto assets are a big hoax, pointing out that all crypto assets are worthless, and even saying that “blockchain” is an integral part of this controversy.

In his article published by the American Institute for Economic Research, author Gerald Dwyer responded to Paul Krugman’s article that what is happening in the cryptocurrency market reminds him of the housing bubble and the mortgage crisis. Although investors should be very careful, their claims are somewhat exaggerated and are not the first of their kind for the industry.

The writer states that the 2007-2008 financial crisis points to other important points. Some government officials have suggested that crypto assets may pose systemic risks to the economy, which can create problems similar to the financial crisis. In addition, cryptocurrencies – like Bitcoin – use large amounts of electricity, which contributes to the high price of electricity and plays a role in the climate change crisis.

Others, according to the author, suggest banning crypto assets to ward off all its negative repercussions on the markets, such as China, which banned its citizens from mining or owning crypto assets, and the United States could do the same.

It is difficult to know what the usefulness of these assets will be 20 years in the future or even before, and secondly, this comparison reveals that it is a mistake to think that current technology will not change, in fact it will change as much and completely as computer technology has changed. For example, work is underway to change the Bitcoin protocol known as “Tabrot” to enable it to conduct smart contracts.

The writer says that smart contracts can perform asset transfers automatically, and can be used when the contracting parties are anonymous, which is difficult to do without reliable automation, as they are now used in some transactions and are likely to find new uses in the future.

The writer points out that it is possible to lose money and even life savings that are invested in cryptocurrencies in the hope of making gains, stressing that it is not wise to invest savings in cryptocurrencies, suggesting that the investment should not exceed 1% of the investable funds in crypto assets, but instead of So experts advise to diversify the digital wallet.

According to the author, despite the repercussions of the now spreading warning of the danger of cryptocurrency trading and the possibility of an unprecedented collapse, he believes that these currencies are likely to be very useful for settling transactions faster than is possible today, and can be used in many other activities.

The writer stresses that crypto assets are likely to have a bright future.


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