What Happens if Bitcoin Crashes to ZERO?

For weeks, they have flooded the Bankruptcy Court with hundreds of impassioned letters detailing their losses and proposing ideas to maximize recoveries. Apart from Mr. Little’s group, at least one other customer coalition has hired a lawyer to recover a share of Celsius’s remaining assets, an unusual show of grassroots activism for a bankruptcy case. Bitcoin has seen a 77% decline from its peak trading at $70,000 in November of last year in the aftermath of FTX’s fall. Meanwhile, the crypto market cap has plummeted from $3 trillion to $900 billion. Bitcoin, which makes up 41% of the crypto market, hit lows unseen seen since the depths of the pandemic two years ago.

Bitcoin’s price is also affected by a number of other things. Even a simple tweet from Elon Musk, CEO of Tesla and SpaceX, caused a crash in 2021. Bitcoin was worth about $67,000 at its all-time high in November 2021, but since then, its price has been all over the place. Bitcoin had a big crash at the beginning of 2018, another one in May 2021, and a third one in the same month it reached its highest value. At the time of this post Bitcoin is worth about $50,000 less per coin than what it was worth in November 2021.


Meanwhile, ETH saw similar losses to Bitcoin throughout 2022, down to around $US1100, while Cardano suffered even worse, falling to $US0.46. To the extent any recommendations or statements of opinion or fact made in a story may constitute financial advice, they constitute general information and not personal financial advice in any form. As such, any recommendations or statements do not take into account the financial circumstances, investment objectives, tax implications, or any specific requirements of readers. NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site.

It’s not likely that Bitcoin will crash to zero

Also saw its https://midhudsonnews.com/2022/12/05/can-bitcoin-crash-to-zero/ price drop by more than 20% in a matter of days, despite its CEO reassuring investors that the company is financially sound and has no material exposure to FTX. While there are plenty of factors affecting crypto’s overall volatility, the main source of this sudden crash is the downfall of FTX, one of the most prominent crypto exchanges. Crypto prices have been on a downhill slide all year, but this week has been particularly brutal. After the implosion of crypto exchange FTX, prices have plummeted in mere days. „I believe that the market capitalization of Ethereum will, as we call it, flippen Bitcoin,“ he said. This cocktail of investment and rapid growth of the DeFi ecosystem helped drive sharp growth.

  • As such, any recommendations or statements do not take into account the financial circumstances, investment objectives, tax implications, or any specific requirements of readers.
  • China’s zero-COVID policies have led to shocking lockdowns in major cities such as Shanghai, freezing economic activity.
  • Many holders of cryptocurrencies such as Bitcoin and Ethereum see them as alternative investing options to investing in the stock market.

Buying tokens is the most straightforward approach to experimenting with cryptocurrencies. But other opportunities exist for exploring the crypto world while potentially protecting your money from seesawing swings. „We need decades of returns in order to understand whether a specific asset is good in a portfolio,“ Fracassi said. „We know that on average stocks return about 6% more than bonds. That’s because we’ve had 60 to 100 years to see the average returns on stocks and bonds.“

Can Bitcoin be destroyed?

Major crypto exchange FTX recently filed for bankruptcy after a major meltdown. On top of that, the crypto economy seems disproportionally driven by retail investors, who treat the sector like a halfway house between conventional day-trading and straightforward gambling. As rising costs bite, those investors may be forced to liquidate some of their holdings, pushing the sector even further into the red. Bitcoin fans may promote an image of their currency as a sort of “digital gold”, with a limited supply that makes it function as an effective hedge against inflation. But in practice, when inflation rises, bitcoin tumbles, and as growth prospects diminish, so too does the opportunity for a digital revolution.

TerraUSD aims to maintain its peg to the US dollar using algorithms. So if one wants to mint UST, he needs to burn the dollar-equivalent amount of LUNA. The Great Moderation was a period of decreased macroeconomic volatility in the United States from the mid-1980s to the financial crisis in 2007. Milton Friedman was a U.S. economist, best known as the most influential advocate of free-market capitalism and monetarism in the 20th century. Macroeconomics studies an overall economy or market system, its behaviors, the factors that drive it, and how to improve its performance. Staff writer Mark Hooson has been a journalist within the personal finance, consumer affairs and fraud sectors for more than 10 years.

Crucially, crypto assets themselves will be relevant during insolvency. At the front of mind should therefore be whether a distressed company or third-party custodian holds crypto assets, and whether it is possible to secure them upon an insolvency event. Sceptics argued vindication after the rapid 2022 crash and resulting high-profile failures of stablecoin issuers and crypto platforms, which further dented confidence. If you’re looking to use Bitcoin to preserve capital or grow your assets, its price is highly volatile—there is no guarantee that you will see any returns; you’re just as likely to lose everything you invest as you are to make any gains. While Bitcoin has a history of recovering after crashes, such a recovery could take months or years.