Did you know that the market size for cryptocurrency will get to $1087.7 million by 2026?
Bitcoin and other cryptocurrencies have been on a wild ride over the past year. Prices have skyrocketed and then crashed, leaving many people wondering what caused the bitcoin crash.
Cryptocurrencies are a new and exciting investment opportunity, but they can also be incredibly risky. With prices constantly changing, it can be hard to know when to buy and sell.
But don’t worry. Keep reading because our guide will explore what caused the bitcoin crash and how you can make smart investments in cryptocurrency that will help you avoid future crashes.
What Caused the Bitcoin Crash?
There are many theories about what caused the crypto crash. Let’s look at them in more detail:
ICOs
ICOs, or initial coin offerings, have been blamed by some experts for the crash of the cryptocurrency market in 2018. ICOs became popular in 2017 as a way to raise money for new blockchain projects. However, many of these projects were scams, and as people began to realize this, they started losing faith in the ICO model.
This lack of confidence led to the crash of the cryptocurrency market in 2018. ICOs are essentially crowdfunding campaigns whereby a new cryptocurrency is created and then sold to investors in exchange for fiat currency or other cryptocurrencies.
The popularity of ICOs lies in the fact that they offer a way for investors to get in on the ground floor of a new project. However, the downside is that many of these projects are not well thought out, and many investors have lost money as a result.
If you’re thinking about investing in an ICO, be sure to do your research first. Otherwise, you may end up regretting it.
Large Investor Manipulation
The Bitcoin crash was a dramatic event that caught many investors off guard. While the exact cause of the crash is still debated, there are a few theories that stand out. Some experts believe that the crash was caused by manipulation from large investors, who cashed out their positions when prices were high, causing a domino effect that led to the crash.
This is known as the “whales dumping” theory. While there is no concrete evidence to support this theory, it is certainly possible that manipulation played a role in the crash. Another theory is that the crash was caused by simply too much hype around Bitcoin and other cryptocurrencies.
As more and more people poured money into the market, prices reached unsustainable levels and eventually came crashing down. Whatever the true cause of the crash may be, it is clear that it had a major impact on the cryptocurrency market and sent shockwaves through the financial world.
Lack of Regulatory Clarity
Many experts believe that the lack of regulatory clarity surrounding cryptocurrencies was also to blame for the recent crash. In particular, many countries have not yet clarified their stance on cryptocurrencies and ICOs, which has created uncertainty and made investors nervous.
For example, China has recently banned ICOs, while other countries have taken a more hands-off approach. This lack of clarity is likely to continue to be a problem shortly and could lead to other crashes.
Of course, this is all speculation and it remains to be seen how things will play out in the long run. However, it is clear that regulatory uncertainty is one of the major risks associated with investing in cryptocurrencies.
Is It Still Worth Investing in Bitcoin?
Bitcoin has had a rollercoaster few years. After hitting an all-time high of almost $20,000 in December 2017, the value of the cryptocurrency plunged to below $4,000 by December 2018. Since then, there has been something of a recovery, with the price hovering around the $10,000 mark. However, this is still well below the highs of 2017.
So, what does the future hold for bitcoin? Some experts believe that the market has bottomed out and that now is a good time to invest. Others believe that there could be further fall ahead. Only time will tell what will happen next in the world of cryptocurrencies.
In the meantime, if you’re thinking of investing, make sure you do your research and only invest what you can afford to lose.
The Benefits of Investing in Bitcoin
Now that we’ve looked at some of the risks of investing in bitcoin, let’s look at some potential benefits. They include:
1. It’s Widely Used
The fact that bitcoin is so widely used is one of its biggest advantages. Cryptocurrencies are only valuable if people are willing to use them, and bitcoin has shown that it has a large and loyal user base. In addition to being the most well-known cryptocurrency, bitcoin is also the most widely accepted.
This means that it can be used to buy goods and services from a wide range of businesses, both online and offline. As more and more businesses start to accept bitcoin, its user base is only likely to grow, making it an incredibly valuable asset.
There are also, many Bitcoin ATMs close to you that you can use to access your Bitcoin 24/7.
2. It’s Decentralized
Decentralization is one of the key advantages of Bitcoin. Unlike fiat currencies, which are subject to government control and regulation, Bitcoin is decentralized. This means that it’s not under the control of any one entity, and there’s no single point of failure.
This makes it much more resistant to manipulation and interference. As a result, Bitcoin can be a more stable and reliable store of value. In addition, decentralization also makes Bitcoin much more accessible. Anyone can participate in the Bitcoin network without needing to go through a central authority.
This makes it a much more inclusive system that can be used by anyone, regardless of their location or economic status.
3. It Has a Limited Supply
It’s no secret that our world is becoming increasingly digitized. More and more people are conducting their business online, and cryptocurrencies are becoming more popular as a result. Bitcoin is one of the most well-known cryptocurrencies, and it has a number of advantages that make it appealing to investors.
One of those advantages is that there will only ever be 21 million bitcoins mined. This limited supply could make bitcoin more valuable over time if demand increases. That makes it a wise investment for those who are looking to capitalize on the growing trend of digital currencies.
So if you’re considering investing in bitcoin, remember that its limited supply could make it a very valuable asset in the years to come.
4. It’s Fast and Convenient
When you want to buy something, you usually have to go through a middleman such as a bank or a credit card company. These companies can take a long time to process your transaction, and they often charge high fees. With Bitcoin, you can bypass all of these intermediaries.
Bitcoin is a digital currency that you can use to make electronic purchases very quickly and easily. There are no banks or credit card companies to slow down the process, and there are no fees.
You can also use Bitcoin to buy things anonymously, which is not possible with traditional payment methods. As a result, Bitcoin is a very fast and convenient way to make purchases.
5. It’s Private
While there are many benefits to investing in bitcoin, one of the most appealing is the privacy it offers. When you make a transaction with bitcoin, your identity is not revealed. This makes it a good choice for people who want to keep their financial information private.
While it is possible for authorities to trace bitcoin transactions, it is not always easy, and your identity can remain anonymous if you take precautions. This anonymity can be important for people who want to avoid government scrutiny or who are engaged in illegal activity.
However, it should also be noted that anonymity comes with its own risks; if you lose your bitcoins, there is no way to recover them. As such, it is important to only invest what you can afford to lose. Overall, investing in bitcoin can be a very lucrative investment, but it is important to be aware of the risks involved.
The Disadvantages of Investing in Bitcoin
While there are many advantages to investing in bitcoin, there are also some potential risks. Here are a few of the most notable ones:
1. It’s Volatile
Bitcoin is a very volatile asset, and its price can fluctuate wildly from day to day. This makes it a risky investment, and you could lose a lot of money if you invest without doing your research first. However, many people believe that Bitcoin is a good investment because it has the potential to go up in value over time.
If you’re thinking about investing in Bitcoin, it’s important to understand the risks involved so that you can make an informed decision.
2. It’s Not Regulated
While the lack of regulation may be seen as a positive by some, it also creates risks. One of the biggest dangers of investing in bitcoin is that there is no one to turn to for help if something goes wrong. If a person loses their bitcoins, there is no government agency that will reimburse them.
This can create a very risky situation, particularly for those who are not well-versed in the world of cryptocurrencies. Additionally, because there is no central authority overseeing bitcoin, it can be used for illicit activities. While this is not necessarily a bad thing, it does mean that there is a greater chance that someone could use bitcoin for illegal purposes.
3. It’s Still Experimental
While Bitcoin has been around for a while, it is still a relatively new technology. This means that it is constantly changing and evolving, and there are still some unresolved issues. For example, the scalability of Bitcoin is still an ongoing concern.
The Bitcoin network can currently handle around seven transactions per second, but as the number of users grows, this number will need to increase. There are also concerns about the security of the Bitcoin network. Although it is designed to be resistant to hacking, there have been a number of high-profile hacks in recent years.
These issues need to be resolved before Bitcoin can be truly mainstream. Nevertheless, Bitcoin is still the most popular cryptocurrency, and its popularity is only growing.
4. It Can Be Used for Illegal Activity
Because Bitcoin is anonymous and not regulated, it has been used for illegal activity, such as money laundering and drug trafficking. If you invest in bitcoin, you could be inadvertently supporting these activities.
5. There Are Scams
Bitcoin is a digital currency that has been around for over a decade. While it is not backed by any government or financial institution, it is still considered a viable investment by many people. However, there are also risks associated with investing in Bitcoin.
For example, there have been instances of scams where people have lost money after investing in fake Bitcoin exchanges or services. Additionally, the value of Bitcoin can be volatile, and investors could lose money if the value decreases suddenly.
Given these risks, it is important to do your research before investing in Bitcoin. Only deal with reputable exchanges and service providers, and understand the risks involved before putting your money into this digital currency.
6. You Could Lose Your Investment
Investing in bitcoin is risky, and you could lose your entire investment. Before investing, make sure you understand the risks and are prepared to lose your money. While the digital currency has experienced some volatility in recent months, its long-term prospects remain uncertain.
Bitcoin is not backed by a government or central bank, and its value is determined entirely by market forces. As a result, there is no guarantee that the value of your investment will not drop sharply. before investing in bitcoin, be sure to consult with a financial advisor to ensure that you are comfortable with the risks involved.
How to Survive the Bitcoin Crash
The bitcoin crash was a wake-up call for the cryptocurrency market. It showed that this market is not as stable and secure as it seemed when prices were constantly reaching new highs.