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What Will Happen If Bitcoin Crashes?

Will Bitcoin crash? What happens if it does? What would that mean for the crypto industry as a whole? These are the types of questions creating a buzz in the crypto industry, given the recent developments in the industry. 

This is not a surprising reaction from people, given the crypto market has earned and retained a reputation for its highly volatile nature. As a result, even the slightest development in the industry can result in a domino effect impacting all stakeholders. 

The common perception in the industry is that only Bitcoin developments can facilitate market changes. However, this is only sometimes true since any changes with other significant cryptos can also rock the boat. This became evident with the recent collapse of the crypto behemoth FTX bringing Bitcoin prices to a new two-year low.       

But does that mean that Bitcoin could suffer from a complete crash? Well, one must understand some essential things before answering these questions. So continue reading to understand these factors better and get better clarity.    

The Volatile Nature Of Bitcoin 

Unlike most other stablecoins, such as the USDT, the prices of Bitcoin are not pegged to any real-world asset. As a result, Bitcoin becomes highly susceptible to crashes, just like any other market crypto. 

This becomes even more evident when you keep track of Bitcoin value over a certain period. You will notice that there is no definite way to tell you precisely what awaits next in this industry. Most Bitcoin price forecasts will fail to show any indication of a future crash, further blinding most crypto investors.   

For instance, Bitcoin reached its all-time high value in November 2021, being the first and only crypto to breach the $60k mark. However, the prices have been on a steep declining trend ever since then. 

The first significant blow came with Russia’s invasion of Ukraine in late February 2022. This showed that even factors independent of the crypto industry could hurt the overall performance of Bitcoin. Yet, Bitcoin did manage to stay over a certain level following this event and the consequences. 

Unfortunately, another incident unfurled with CoinDesk releasing the leaked balance sheet of Alameda Research, the sister company of FTX. The leaked balance sheet highlighted that Alameda relied heavily on FTT tokens, FTX’s native currency. This soon resulted in a series of events ultimately stopping with FTX’s CEO Sam Bankman Fried filing for bankruptcy. 

All these events resulted in Bitcoin reaching a new two-year low, causing devastation across the crypto industry. But this has also taught many lessons to crypto enthusiasts, and one of the most important lessons is that no crypto is too big to fail or collapse. But does that mean there could be such a BTC crash in 2023 that could end with a complete collapse of Bitcoin?           

So, Could Bitcoin Crash And Reach A Value Of $0 Or Less?

Technically, any crypto could crash if things went south for the industry. The crash of Terra Luna is a blatant example of this possibility. 

That said, Bitcoin is not Terra Luna or any other crypto. One must uphold that Bitcoin is still the first and the largest crypto available in the market. Besides that, the industry has yet to be able to produce a worthy competitor to Bitcoin. 

For something so valuable and popular as Bitcoin, there has to be some unprecedented shift in the market for this behemoth to crash. But why is that the case? Let’s understand the functionality of Bitcoin to get a better understanding. 

The Market Could Be In Panic 

For starters, people buy Bitcoin as a long or short-term investment. Some might buy it when the prices are low and sell it off when prices start to recover once again. On the other hand, other crypto investors buy Bitcoin to hold on to it for a long period. Certain price hikes or crashes do not influence the investment decision of these people.             

But that is not all, since many people believe that Bitcoin will someday replace the conventional fiat currency. According to them, the centralized banking system has many drawbacks, and the future belongs to decentralized banking. One must understand that people with this belief are very passionate about cryptocurrencies.   

Economies Could Tremble

Bitcoin is now also used to buy goods and services across many countries around the globe, including El Salvador. However, the consequences of this adoption have sometimes been very swift since then.

Despite that, Bitcoin taking down massive crypto will not be easy. The decentralized nature, along with the complex infrastructure, makes a robust foundation. So even if you are a powerful government, destabilizing such a network is next to impossible.      

Besides that, some other crypto industry giants are called crypto whales. These individuals hold a significant share in the industry, giving them the power to influence the market as per their whims. Hence, Bitcoin will not fall or crash without these individuals’ consent. 

Given these factors, dreaming that Bitcoin would collapse someday is as far-fetched as possible. That said, there are still certain influencing factors that can cause a devastating impact on the overall Bitcoin value.   

What Would Happen If Bitcoin Crashes?

For argument’s sake, let’s say Bitcoin crashes after every country makes every Bitcoin-related operation illegal. Even if the network remains intact, such a crash will unfurl many financial devastations affecting millions, if not billions. This will put every investor in an impossible situation, with delisting being their only alternative. 

But besides that, a Bitcoin crash would also translate to the end of the crypto-mining industry. If Bitcoin loses all its value, that would mean no mining rewards putting millions of miners out of jobs.       

If Bitcoin were to crash in reality, it would more or less mean a devastating end to the crypto industry. In addition, numerous companies offering exchange, trading, and payment services would also be out of business. All these will further cause a domino effect causing the crash of almost every other crypto in the market. Hence, Bitcoin’s crash would be the beginning of the end of the crypto industry.  


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