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Crypto Crash: Lessons From Bitcoin’s History

While Bitcoin enjoys a stable market in most countries, there are many places where the cryptocurrency crashed significantly in 2018, particularly in countries with unstable economies or political turmoil. Most of these crashes have happened after Bitcoin reached astronomic heights, but at the time, they were considered to be nothing more than a correction or a small blip. It is hard to identify what leads to significant price fluctuations in the cryptocurrency market without any historical data.

To find answers, we need to look back. Like with most commodities, Bitcoin’s price history has been fragmented and incomplete. During its early history, few people recorded the prices of the cryptocurrency, and the available data is not sufficient to draw reliable conclusions from. As a matter of fact, there is no evidence that some of those crashes took place at all. However, thanks to modern technology and thanks to the historical data recently released by several exchanges, we can analyze all past crashes in detail. We can also compare the details of these crashes to the possible causes of similar crashes in the past.

We can’t say for sure what caused these crashes, but there are many similarities between them. It is safe to say that all of them were accompanied by significant price fluctuations. They were all sudden, sharp declines in the value of Bitcoin, which took their victims by surprise. All of them seem to stem from unanticipated events in the financial world, which caused adverse effects on the cryptocurrency market in general.

Bitcoin has crashed before

Bitcoin had crashed before, most famously in 2011 when the price was halved by panic selling. What separates Bitcoin crashes from other market crashes?

The difference between Bitcoin crashes and other financial market crashes is that Bitcoin’s value is only stored in the blockchain, with no central authority to protect investors. This means that when people are scared of losing their money, they have nowhere else to go but sell their Bitcoins on the open market. When this happens, prices plummet due to an influx of supply all at once. This is why Bitcoin rallies back up. People are tired of selling, and they want their money back. This process only occurs when there is new money entering the market, which then drives prices up.

When Bitcoin first debuted as an alternative currency, it was based on the idea that the internet was going to be a decentralized network. This means that no single entity can own or control it. The protocol itself is transcending and anonymous. It was the first time that anyone could hold their own money and not rely on a bank or institution to keep it safe. But like any other store of value, Bitcoin is only as good as its utility. Because of this, there are boom and bust cycles that move in accordance with internet-related hype. When we first got into Bitcoin, we saw huge gains in 2011 because of hyperinflation in other countries.

Bitcoin has always bounced back.

Bitcoin has always bounced back. Credit goes to how it’s been carefully designed to restrict any one individual from knocking it offline or influencing its value with bad behaviour. In fact, the study’s conclusions suggest that Bitcoin will one day be used as a global currency for all kinds of transactions and even stock market investments on a large scale, which would make it infinitely more valuable in the future. Bitcoin trading platform is an investment opportunity for those willing to take on some risk. It has the potential to provide significant returns but it also comes with a higher level of volatility than traditional investments like stocks and bonds which means that you need to be prepared, both financially and psychologically, before jumping in.

For regulators, however, this transition will be a hard one. To protect the public interest, existing laws will have to be updated to ensure that activities taking place on large blocks are not being used in order to create money out of thin air masquerading as currency. The law currently does not regulate Bitcoin operations. There is no official financial regulatory authority that can verify whether a Bitcoin transaction has been authorized by a person, entity or bank acting as a Bitcoin exchange or network node. As for now, there’s no clear definition of how Bitcoin should be treated according to the law.

The study’s authors were careful to mention that it is impossible to foresee the long term consequences of the Bitcoin experiment. However, they said that this new form of money would probably not be able to remain competitive with traditional forms of money carried out by banks and governments if those actors continue to prevent Bitcoin from being an efficient means of exchange.

A final warning about bitcoin crashed.

The cryptocurrency has whittled away the power of the banksters, making it difficult for them to profit off other people’s money. What’s worse, many people are flocking to bitcoin because they want to take control of their own economic destiny. For those not in the know about bitcoin, there are a few tidbits you should be aware of before deciding whether or not to invest.

By using bitcoin, you can move wealth outside of the banking system and into a decentralized network that is beyond government control or interference. The cryptocurrency is made up of digital coins that are created by users employing powerful computers to solve complex algorithms. Once the coins are created, they can be bought and sold on an exchange such as Coinbase, which decides the value of the coins by how much people want them.

Bitcoin has gained so many users because it’s a way to opt-out of the current financial system and create your own personal economy. While the price of bitcoin can fluctuate drastically, there’s little control over your investment. Instead of relying on the Federal Reserve, you can put your faith in Satoshi Nakamoto, who created bitcoin to subvert the bankster stranglehold over our money supply.