Earlier this week, popular cryptocurrency Bitcoin experienced a bit of a downer week when it’s value fell to $8,000, a $1,000 drop from its “standard” value. Now, there’s things I can count on–my Chrome VPN, my phone, etc.–but cryptocurrency is not in my reputable list. But hey, cryptocurrency holds a reputation for being volatile and nothing was too out of the ordinary. That is until Bitcoin experienced a crash.
Yes, even established cryptocurrencies crash; after all, it’s a form of currency, and no currency is safe from the market. However, a cryptocurrency crash is a bit complicated, so let’s take a look at what happened and what this crash means for Bitcoin.
Inspecting the Crash
When stock crashes, two scenarios manifest: the crash is permanent and won’t recover or the stock will make a successful recovery, bouncing back better than ever, valuing higher than it has ever been.
Same applies to cryptocurrency. When Bitcoin experienced this week’s crash, investors of the cryptocurrency became aware of these two possibilities, labelled as the “bull” market and the “bear” market. Whichever one becomes the reality of Bitcoin, one thing is for sure: investors will be shocked.
A Bull Market
According to various sources and analysts, Bitcoin is in the early stages of it’s next bull market, where the value of Bitcoin soars to unprecedented heights and investors make a killing off their obtained Bitcoin.
The last time Bitcoin experienced the bull market phase was in 2017, when Bitcoin almost reached $20k a piece.
However, predicting cryptocurrency is a difficult task. Due to crypto’s inherent volatility, any guess is just that–a guess; while Bitcoin sometimes enjoys a stable week from time to time, it’s value is always shifting.
So what happens if Bitcoin shifts the other way? What if it becomes a bear market? Well, it already is one, kind of.
A Bear Market
Bitcoin isn’t the only cryptocurrency available; in fact, there’s tens of them. One of these cryptocurrencies is called “XRP”, and this week XRP dropped “below bear market bottom”, signaling the start of crypto’s bear market.
While the different cryptocurrencies wildly differ in value, the significant plummeting of one tends to spell out doom for others, and while XRP is a relatively small cryptocurrency, it’s crash still has an effect. With Bitcoin and XRP both crashing in the same week, other cryptocurrencies have suffered as well, causing Ethereum to drop in value as well.
In a bear market, cryptocurrency will experience something akin to a stock market crash, where overall value suffers; though, there is no recession risked with this crash, so it’s not as bad as a stock market crash.
Now, a bear market and a bull market can work hand-in-hand. Some analysts are proclaiming that cryptocurrency is entering a bear market now, but will transform into a bull market later, perhaps during the “halvening” crypto enthusiasts are raving about.
As of now, cryptocurrency as a whole is stuck in this bear market for a while, and while the possibility of a bull market is still open, no one can agree on when the cryptocurrency market will enter one. However, these dips in value may be a good time to invest, as the value will probably soar; not a for a while, mind you, but they will.
The point is that Bitcoin’s crash earlier this week is a symptom of a crumbling market, though it will correct itself in time. Probably. Maybe. I want to avoid making definitive statements when talking about cryptocurrency due to its aforementioned volatility.
However, Bitcoin is too popular to die, and cryptocurrency itself is becoming a bigger and bigger presence in the modern world. Just think of the crypto market as a virtual stock market. Except, you know, a lot more unstable.I’m not making Bitcoin sound pleasant, am I?