What happens when Bitcoin crashes? Why did Bitcoin crash?

Dec 03,2022
What happens when Bitcoin crashes? Why did Bitcoin crash?

In the currency circle, no one does not know Bitcoin. Bitcoin is a virtual encrypted virtual currency that uses a lot of energy based on blockchain applications and specific algorithms. His production and operation are all around the Internet, with the characteristics of security, convenience, privacy and encryption. Because of the unique calculation method of Bitcoin, its total amount is very limited and scarce, which has been widely hyped. Some people even think that Bitcoin represents the direction of future currency development, and it has become the hottest investment product in recent years, giving birth to a large number of coin speculation groups. Therefore, some investors ask, what will happen if Bitcoin crashes? Why did Bitcoin crash? Then, let's follow Xiao Bian to have a look.

What happens when Bitcoin crashes?

1. After all, it is investment and wealth management. The collapse of Bitcoin will first impact these coin speculators and investors. A large number of investors and players will break their positions, lose money, and lose their money. This is the most intuitive and will have a partial impact on society.

2. The collapse of Bitcoin will have an impact on many companies that are interested in the future of Bitcoin and buy it in large quantities, such as Tesla, a well-known new energy company.

3. The development of blockchain applications related to Bitcoin will also be affected. Blockchain applications are the underlying technology of Bitcoin, and Bitcoin is the first application of blockchain applications. Therefore, Bitcoin and blockchain applications are closely related. If Bitcoin collapses, it will definitely have a significant impact on blockchain applications in the wind. Local governments will reduce their enthusiasm for blockchain research and development, causing the whole blockchain application to stop, It will have an impact on the development of science and technology.

4. The collapse of Bitcoin will affect the "miners" and "mining machines" in blockchain applications. Bitcoin miners use bitcoin mining machine to carry out digital calculation, so as to get Bitcoin rewards. The collapse of Bitcoin will reduce the enthusiasm of "miners", and a large number of "mining machines" will be taken off the shelves, which will affect the entire mining machine industry chain and impact the most serious video card field.

5. The collapse of Bitcoin will have an impact on some other digital currencies, and more Chinese scholars will believe that digital cryptocurrencies are too many inflated economic foam, thus affecting the development of the entire digital currency industry.

Why did Bitcoin crash?

1. Global Macroeconomy

Inflation is one of the main reasons why the stock market and cryptocurrency market will be in a bad position in 2022. The rise in the cost of daily consumer goods failed to catch up with wages, causing the inflation rate to reach the highest level since 1982. In addition, leading enterprises are laying off workers to support their families in a continuous and harsh bear market.

The Federal Reserve raised interest rates to curb inflation, but ordinary people became powerless to borrow. With the free flow of capital from the market, such developments have resulted in lower spending and concentrated borrowing.

2. FTX Crisis

The FTX crisis began when the cryptocurrency market became better due to the collapse of TerraUST and Luna. Sam Bankman Fried, who was touted as the future of digital currency, fell out of favor due to all financial misconduct. FTX announced bankruptcy and had previously stopped withdrawing cash from the exchange, which made investors feel dizzy.

The damage has already been caused, and no matter what reason, the crisis will not be solved immediately if the damage is removed according to financing. The transaction price of Bitcoin before the crisis was US $20000, falling to the level of US $15000, and may decline further in the next few weeks.

3. Diffusion of negative emotions and fears

Because the market and Bitcoin remained depressed for 11 months, investors did not show a positive attitude. Bitcoin's "fear and greed index" has reached extreme fear, indicating that investors plan to avoid the market.

All these factors have also increased the pressure on the price of Bitcoin and shaken its position at the level of 16000 dollars. A further decline could bring the Bitcoin spiral to its lowest level in the year and cause serious damage in the coming weeks.

Speaking of this, I believe you have a certain understanding of what will happen to Bitcoin and why it will collapse. In general, Xiao Bian also reminds investors that the currency circle market is unpredictable, which can make you rich overnight, or make you bankrupt. There is no secure business. You must consider clearly before entering the market and do not invest blindly.