Bitcoin Dropping for Weeks – Will it crash?

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Bitcoin Dropping for Weeks – Will it crash?

THE TOP 10 BEST CRYPTO EXCHANGES IN 2022

The rate of bitcoin dropping, which has been occurring for weeks, has many people worried. Will Bitcoin crash? A lot of people are starting to worry that bitcoin will fall as a result of the recent run of occurrences that have scared both investors and crypto enthusiasts.

The most recent all-time high (ATH) for Bitcoin was in November 2021, when the price of a single coin reached $69,000. But things have drastically changed in recent months. It appears to be worse now than it was previously.

Since reaching its all-time high, the price of bitcoin has been steadily declining. The cost of one bitcoin was below $18,000 on June 20, 2022. That is a significant decrease of more than 70%.

There doesn’t seem to be a bottom in sight, which is unfortunate. Many crypto enthusiasts are wondering why Bitcoin is going down. Will Bitcoin crash?

Let’s look back in time to try and figure out why Bitcoin keeps going down, if it will keep going down, or if it is dead.

We’ll also examine instances where the price of bitcoin dropped by at least 50% over a period of weeks or months, just like it is now, to see if we can spot any patterns.

Times When Bitcoin ‘Crashed’

The leading cryptocurrency by market share, Bitcoin, is not unfamiliar with price drops. The price history of Bitcoin shows that this has been the trend ever since the currency’s inception.

At least six times during the course of its 13-year existence, Bitcoin prices have dropped by more than 50%. However, it only recently reached its all-time high. This indicates that Bitcoin defied the odds and recovered to reach its peak values, if not above them.

What elements of the market influenced the Bitcoin crash? Let’s first examine the previous bitcoin crashes to determine what led to them and see what lessons can be drawn from them.

2009 – 2011: Bitcoin Dropped by 92% from $31.9 to $2.6

Bitcoin was initially available for nothing on January 3, 2009. Laszlo Hanyecz made the first real-world transaction with it on May 22, 2010, when he spent 10,000 BTC on two pizzas in Jacksonville, Florida, for a price of less than $0.01.

He wished he knew that by March 2022, he would have increased his wealth by more than $500 million.
After that, on July 17, 2010, Bitcoin’s cost increased to $0.09. The first time that Bitcoin was worth $1 was in February 2011.

From there, the cost increased from $1 to a high of $31.9 on June 7, 2011. However, the price dropped to $2.6 by mid-November 2011, a 92 percent reduction in value.

Why did Bitcoin drop by 92% in 2011?

The main cause was the hacking of the biggest trading platform at the time. Alexander Vinnik, who goes by the alias “WMX,” was able to access the administrative account of the creator of MtGox exchange, a trading platform with headquarters in Tokyo.

He fraudulently transferred several bitcoins to himself on June 19, 2011. He also “sold” them to the market at any rate a buyer was willing to pay.

As a result, the value of bitcoin fell below $0.01. However, the price immediately returned to its user-traded value within minutes, and MtGox restored complete control of the site. Affected accounts have a value greater than $8,750,000.

The pricing struggled during that time due to later hacking activities. The third-largest bitcoin exchange, Bitomat, stated in July 2011 that its owner had lost access to his wallet.dat file containing approximately 17,000 bitcoins (roughly 220,000 US dollars at the time).

He announced that he would sell the service for the missing amount, aiming to use the funds from the sale to refund his customers.

In August 2011, MyBitcoin, a now-defunct bitcoin transaction processor, declared that it was hacked, which caused it to be shut down, paying 49% on customer deposits, leaving more than 78,000 bitcoins (equivalent to roughly US$800,000 at that time) unaccounted for.

2012-2013: Bitcoin Dropped by 70% from $230 to $68.5

Overall, 2012 turned out to be a quiet year for Bitcoin. However, Bitcoin had significant price growth towards the beginning of 2013. Its opening price for the year was $13.28. It then soon picked up speed in the latter week of March.

Bitcoin’s price surpassed $100 on April 1, rising to $230 on April 8. This was not to continue, though, as a similarly quick decline followed, bringing the price down to $68.50 on July 4, 2013, a significant 70% fall.

Why was Bitcoin Down by 70% in 2013?

The breakup between Mt. Gox and CoinLab. On May 2, 2013, CoinLab sued Mt. Gox for $75 million, claiming a violation of the contract. Earlier in February 2013, the businesses established a partnership under which CoinLab would manage all of Mt. Gox’s North American services.

In its lawsuit, CoinLab claimed that Mt. Gox had refused to give it permission to transfer its current U.S. and Canadian customers to CoinLab.

The US Department of Homeland Security (DHS) issued a warrant to collect funds from the Dwolla account of the US subsidiary of Mt. Gox on May 15, 2013. As a result, the DHS took from the subsidiary more than $5 million. Mt. Gox halted withdrawals in US currency on June 20, 2013.

On August 5, 2013, Mt. Gox declared that it had suffered “significant losses” as a result of crediting deposits that hadn’t cleared completely and that it would no longer accept new deposits until the money transfer was finished.

Customers who had been waiting weeks or even months to withdraw their money became alarmed as a result of this action, which led to the drop of Bitcoin to this low point.

2014 – 2015: Bitcoin Dropped by 81% from $953 to $178

Bitcoin had a difficult year in 2014. As the discussion over bitcoin gradually faded, its price fell throughout the year, from $953 on January 6, 2014, to $178 on January 14, 2015. This was a staggering 81 percent decline in the price of Bitcoin.

Why was Bitcoin Down by 81% in 2015?

Investors did not have an easy time during this period as a number of negative reports were broadcast.

The news of Mt. Gox’s collapse shook the currency. The exchange, with its headquarters in Japan, processed around 70% of all global Bitcoin transactions in 2013.

It filed for bankruptcy in February 2014, and $390 million worth of bitcoins went missing. The CEO was ultimately detained and accused of embezzling.

On March 3, 2014, Flexcoin announced that the business would be closing as a result of a cyber attack that had taken place the day before.

The statement on their homepage read: “Flexcoin is closing our doors immediately since we do not have the resources, assets, or others to recover from this loss [the hack].” Users were no longer logged on to the website, thus creating panic.

The Chinese cryptocurrency exchange Bter lost $2.1 million in Bitcoin in February 2015. Additionally, a hacker stole $5.1 million worth of bitcoin from the Bitstamp exchange in Slovenia.

2016 – 2018: Bitcoin dropped by 83% from $19,497 to $3,237

In 2016, with occasional little surges, bitcoin’s price moved sideways. However, Bitcoin finally went above the $1,000 barrier for the second time in January 2017. This started a jubilant bull run phase.

Other organizations started creating cryptocurrencies to compete with Bitcoin as mainstream investors and governments became deeply interested.

As international diplomats, governments, mathematicians, economists, IT experts, and financial specialists progressively explored cryptocurrency regulation and popular adoption, thousands of alternative coins were created.
Prices rose to $1,290 on March 2 and 3, 2017. This was above the $1,242 high set in November 2013.

On May 1, 2017, the price reached a new high of $1,402.03, and on May 11, it surpassed $1,800. The first time the price crossed $2,000 was on May 20, 2017.

The price first crossed $5,000 on September 1st, 2017, reaching $5,013.91. Then, from November 17 to 20, 2017, the price of Bitcoin momentarily reached a high of $8004,59.

The price then increased after reaching $17,900 on December 15 to hit a new record-high of $19,497 on December 16. On December 22nd, 2017, Bitcoin fell to $13,800.

By February 5th, 2018, the cost of bitcoin dropped by 50% to $6,200. This prevailed for the majority of the year.
By December 15, 2018, Bitcoin had dropped to $3,237, a 15-month low and an 83 percent decline from the prior year.

Why was Bitcoin Down by 83% in 2018?

This was the result of a chain of events. Hackers broke into NiceHash in December 2017, stealing 4,700 bitcoins from the service that let users sell hashing power. At the time, the total value of the stolen bitcoins was over $80 million.

Also, following a cyberattack, the second in eight months, Yapian, the firm that controls the Youbit cryptocurrency exchange in South Korea, filed for bankruptcy on December 19.

2019 – 2020: Bitcoin dropped by 62% from $13,016 to $4,970

Bitcoin opened the year 2019 with a trading price of $3,844. By June 26, it had climbed to $13,016. It maintained this range for months and gradually dropped to below $7,000 at the end of the year.

By March 27, 2020, bitcoin dropped to $4,970, which was the lowest it went that year. This was a 62% decline in price. Over $1 billion in futures contracts were liquidated at the time, wreaking havoc in the market.

Why was Bitcoin Down by 62% in 2020?

The erratic trading on Wall Street caused the price of bitcoin to plunge. Stocks experienced their worst performance since the “Black Monday” market crisis in 1987.

Bitcoin recovered quickly, such that by November 30, 2020, the price reached a new all-time high of $19,850. As of December 31, 2020, Bitcoin has climbed to $29,000.

2021 – 2022: Bitcoin drops by 75% from $69,000 to $17,567

Bitcoin’s growth was boosted by the pandemic shutdown and the ensuing government initiatives that fueled investors’ concerns about the state of the world economy.

Beginning the year at $29,374, Bitcoin reached a high of $41,973 on January 8, 2021.
After Elon Musk and Tesla announced investments in Bitcoin and the acceptance of payment on February 8, 2021. The price of bitcoin had risen to a new record high of $50,000 by February 16th, 2021.

As Coinbase went public in April, Bitcoin hit a brand-new record high of almost $60,000. Institutional interest further pushed its price up, and on April 14, 2021, it achieved its all-time high price of $64,800. By November 10, 2021, Bitcoin had reached an all-time high of $69,000.

Bitcoin plummeted to $46,164 in mid-December 2021 before fluctuating further as investors remained concerned about inflation and the development of a new variation of COVID-19, Omicron.

Between January and May 2022, Bitcoin’s price fell gradually, rising as high as $47,445 at the end of March before falling further to $28,305 on May 11, its first time going below $30,000 since July 2021.

On June 18, 2022, the price of bitcoin fell to $17,567 for the first time since November 2020. This is a 75% drop.

Times When Bitcoin Dropped

Times When Bitcoin Dropped

Why is Bitcoin Going Down in 2022?

Below, we examine some of the reasons.

The Fear of Recession:

When traditional markets experience a downturn, the ramifications for crypto might be disastrous. When there is an economic crisis of any severity, investors have a strong tendency to try to balance their high-risk assets.

Unfortunately, most investors, particularly individuals, regard crypto investments as “high-risk,” and they may be among the assets that experience investment retraction during a recession.

For weeks, there has been talk of an approaching recession. Naturally, crypto enthusiasts are concerned and are taking the proper precautions to limit the effect. This has resulted in panic selling, which has resulted in massive reductions in the price of crypto assets on the market. Even Bitcoin is susceptible to this effect.

Celsius withdrawal freezing

Celsius, one of the leading decentralized finance (DeFi) crypto lending platforms, announced the suspension of transfers and withdrawals on its platform on June 13, 2022.

As of May 17, the company had $11.8 billion in assets under management (AUM), down from more than $26 billion in October of last year.

The corporation announced the suspension of cryptocurrency withdrawals in a statement.

“Due to extraordinary market conditions, we are suspending all withdrawals, swaps, and transfers between accounts today. We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.”

Following this revelation, Bitcoin fell to $23,476 and Ether, the second-largest token after bitcoin, fell by up to 16 percent to $1,177, its lowest level since January 2021.

Furthermore, there have been abrupt and significant sell-offs of key cryptocurrencies. This has caused fear and more sell-offs as consumer confidence has been shaken.

Bitcoin Is Still in Its Infancy

Bitcoin has barely been in existence for 13 years. It is still in the pricing phase. Therefore, the volatility experienced every so often is simply driving the currency to a point of stability in relation to other means of exchange and stores of value. By comparison, both gold and fiat currency has been used for a very long time.

Will Bitcoin recover?

The leading cryptocurrency has been trading in a very small range between $18,000 and $23,000 over the previous few weeks as stock markets and cryptocurrencies failed to regain any meaningful upward momentum.

To be completely honest, it doesn’t look great. But Bitcoin has also shown that it is a tough little beast. The future? It might yet emerge from the ashes. The only thing that is clear is that bitcoin will look substantially different in the future than it does now.

Final thoughts

Much like in the Phoenix fable, there has been plenty of rising and falling throughout the history of Bitcoin. Nobody can predict with any degree of accuracy whether the market will rise or fall in the foreseeable future.

Also difficult is predicting the bottom of the stock market. Unquestionably, this is one of the most challenging periods to be an investor. There are only two outcomes that are definite, though.

It’s possible that the price will keep dropping until it reaches zero or loses all value. Nobody is truly aware. Some people think Bitcoin was a bubble that had to bust eventually. It could lose all value if that’s the case.

The price may eventually fix itself. It’s probable that the price will adjust and begin to rise again. This is most likely due to traders’ closing out their short positions. And this is the most expected conclusion based on the price chart history.

The upside here is that if you stick to your investing strategy and think long-term, the present situation will prove to be a terrific purchasing opportunity.

Sources:
www.in2013dollars.com,
www.investing.com,
www.wikipedia.org
www.coinbase.com
www.blog.bitmex.com
www.coinmarketcap.com
https://news.bitcoin.com

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