At the moment, Bitcoin's price is below $20,000. And this represents roughly a third of the value back in November 2021. Since March, the value of the most popular cryptocurrency has been nose-diving. Other cryptocurrencies are also affected in the same way. And this represents what is known as a crypto crash.
When the price of Bitcoin started falling, it caused ripples among Bitcoin investors. Many have lost a lot because of the crash. The crash has forced many to liquidate their Bitcoin in an attempt to prevent incurring further losses. But the effect is the same for everyone, including those who still hold on to their Bitcoin.
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What is Crypto Crash?
Typically, a crypto crash refers to a time when cryptocurrencies lose value. Since March, Bitcoin has been losing financial weight in terms of falling prices, meaning entrepreneurs and investors that had invested in Bitcoin suffered losses. The crypto market is unique because of its nature.
Among the main features of cryptocurrency is high price volatility. And this means that cryptocurrencies like Bitcoin can gain or lose value anytime and without expectation. This high price volatility and uncertainty in the crypto market explains why many investors were shocked by the crash in the latest crypto crash. If they could foresee it, they could have avoided it.
Bitcoin and other cryptocurrencies are also high-risk investments. That's because of the uncertainty in the market and the difficulty of predicting how the market will be. So, investors are always keen to know the price dynamics every minute. But does this make it easier for them to foresee a potential crash? The answer is no.
Can Bitcoin Survive A Market Crash?
Bitcoin is not new to market crashes. It has experienced many other similar crashes before. The implication of this is that Bitcoin does survive market crashes. But this is a simplified way of looking at it.
Currently, Bitcoin is in a crypto winter. And this is an extended period when the price of crypto remains low but stable. Crypto winters can take as long as two years, but they can also be shorter. Crypto winters come after crypto crashes.
From a pessimistic view, all cryptocurrencies may not always survive market crashes. But some factors make Bitcoin unique. First, Bitcoin is the largest and most successful cryptocurrency to date. Second, Bitcoin has attracted many users ranging from individuals to institutional investors. Some estimates show that Bitcoin alone has over 190 million users.
These two factors make Bitcoin very likely to survive a market crash. Assets with solid user bases and popularity tend to have stronger roots. A market crash may not lead to their total obliteration.
After all, winter comes before spring. This phrase provides a more optimistic view of Bitcoin regarding whether it can survive a market crash. And this is the reason some investors hold on to their Bitcoin for the long term. To HODL (Hold on to Dear Life) is to hold on to cryptocurrency despite a market crash, hoping that the prices will rise in the long term.
Final Thought
Bitcoin can survive a market crash. It has a history of doing so. Moreover, Bitcoin is the leading cryptocurrency with a high user base that makes it develop strong roots. Even with the most recent crash, Bitcoin has survived, and prices have stabilized.