Why Is Bitcoin Crashing?

According to https://search.brave.com/search?q=bitcoin+price&source=web

In the past month Bitcoin has lost 20% of it's value are we about to experience a cryptocurrency crash?

Poll Options

  • 175
    Yes
  • 102
    No
  • 413
    I dunno

Comments

  • +85

    Bikies

    • The stock market crashed… so goes everything else.. the stock market is doing really well now and BTC along with Alt coins are recovering… SAME SAME.. the crypto cycle is prolonged now and wont top out until next year sometime.. unless something else happens or things change.

  • +15

    Your guess is as good as anyone's.

    After such a massive run up in price it's natural that some people will take profit. If too many people do that, it can turn into a collapse. Bitcoin has fallen peak to trough over 90% three times during its history. No reason why it can't happen again.

    As long as not too many people try to withdraw money from the system, it can keep going. Tether keeps printing more dollars and everyone is happy.

    • +2

      This is my theory, during the covid, there were plenty of people who got nothing better to do that invest in bitcoins and share markets.

      • +7

        not a theory, you are spot on. All this money printed needs to go somewhere.

        • -7

          Theoretically speaking, the cost of land and bitcoin has gone down by a decent margin over the last 2 years. That's when we take inflation into account, with 40% of currency created out of thin-air.

          It's just all a turd sammich.
          The best investment you could have made during this time was on yourself, by Up-Skilling and making yourself indispensable.

          • +21

            @Kangal: The cost of land has gone down? Are you high? Real Estate has jumped over 20-25%

            • +5

              @Adelv: .
              +25% up in price
              -40% value in money

              …that was my point

              • +3

                @Kangal: Ok - I'll bite…

                What makes you say that money has dropped 40% in value?

                • +11

                  @ptrubs: All currencies the past two years have been greatly devalued due to the money press going Bbbrrrtt.

                  We went from $900B to $1400B in the span of 1-2 years, the highest rise in our AUD history.
                  https://tradingeconomics.com/australia/money-supply-m1

                  Meanwhile, the USD is the centre of international commerce. And their Federal Reserve had a total of $4T dollars at the end of 2019, then had over $7T dollars in middle of 2021.
                  https://techstartups.com/2021/05/22/40-us-dollars-existence-...

                  We're feeling the effects of anti-social restrictions, and for many being unemployed and on the dole. And I get that a lot of people are doing it tough.

                  But it's going to get worse. This created wealth will eventually seep into everyday things and we will see the price of all goods and services rise dramatically in the coming years. The wealthy had first dibs into this money but it will eventually trickle down to everyone. The thought is that for now that wealth has been pumped into speculative markets such as crypto, stocks, and real estate which seen it rise as those people hedged against inflation. But we should see the price of sliced bread, and everyday items, eventually rise making everyone "poorer" but mostly the already-poor who don't have options and couldn't make any investments/hedges during this period.

                  • +9

                    @Kangal: Always do your own research.

                    Bitcoin is up 630% since Dec 2019. Ethereum up 1750% since Dec 19.

                    Crypto way out paces dollar depreciation.

                    Go to your fav charting website to check for yourself.

                    • +2

                      @canuckinoz: Yeah, you're right.
                      I should've just said Land and maybe Stocks. Crypto had a strong rally that outpaces the (hyper) inflation rate.

                      …but I hope I've explained my point.
                      (more knowledgeable people can chime in)

              • +1

                @Kangal: Inflation is barely lingering above 3% (RBA target). The value of assets certainly hasn't dropped 40%.

                • +3

                  @duchy: RBA targets are wrong.

                  Anybody else surprised that the milk price has gone up? It is now $2.60 for a 2 litre bottle, up 8.7%.
                  https://www.ozbargain.com.au/node/668257

                  • +1

                    @rektrading: Can’t agree more, RBA is wrong. No idea what bucket they use to check inflation but prices have skyrocketed look at your grocery and fuel bills for example

                    • @naru6705: They use a 'trimmed mean' system…basically their own selection. So things like housing are omitted.

                      That being said, the effects of aggressive printing haven't come through yet as people are squirreling it away in uncertain times. Once people start spending and then it's basic supply and demand. There wont be enough supply, so prices will rise.

                      So inflation isn't too bad at the moment, but spending / income charts are massively out of whack.

    • +1

      Just a quick question for you Cluster before I consider purchasing at this discounted price: what can I do with Bitcoin?

      • +12

        You can buy it now at a discounted price, go on holiday to El Salvador when it goes up in and spend it tax-free.

        • +5

          Tax-free if you buy the Bitcoin for cash in an alleyway

      • You can share in the pollution of the earth by wasting finite resources! Go boomers… Oh wait.

    • -1

      20% is nothing, we've recently just experienced a 40% crash from the peak. If you look at the last two major crashes in 2014 & 2017, they were only 75% before sky-rocketing up over the next 3-4 years. In May we already crashed 55% from the peak. If you bought in on altcoins then, you'd have 3-10x'd your money by now. If you're not scared, wait for the big crashes and buy in like no tomorrow. Take your initial investment out when you double your money and then no matter what happens, you can't lose.

    • Here is my thought, it does proper thing. Start 0.618 > 2.618 > 1.618 > 6.618 > 4.618 > 8.618 > 12.618. In other words it's testing approx level
      https://www.tradingview.com/x/Q0ESpxsE/

  • +2

    Governments have finally woken up and are looking at how to regulate and track (ie. how to tax) cryptos.

    • +4

      You mean trash the decentralised system so they can inflict their own CBDC's on everyone after they raid your bank account?

      • +2

        Good to see someone else sees what is going on. The system is being deliberately crashed to make way for the great reset

      • +9

        No, they mean pay your fair share of tax on profits that you make on an investment product.

        • -1

          Can you please tell me the dollar amount that is my 'fair share'?

          • +11

            @EightImmortals: Please refer to the ATO website for this information.

          • +1

            @EightImmortals: The lookup table is literally on the ATO website. *50% if its a CGT gain over 12 months old.

          • +4

            @EightImmortals: I say we go back to the income tax levels in 1914 of 0%, before the "temporary" tax was introduced to fund the war effort in 1915. Before then, the government was funded by tarrifs from international trade.

            • -1

              @Tonyh87: Shhh! We're not supposed to know that.

            • +4

              @Tonyh87: Australia's effective tax rate, once all things are considered, is pretty similar to the rest of the countries in the OECD (https://data.oecd.org/tax/tax-wedge.htm). We're taxed a tiny bit more than the US, but less than a lot of other comparable countries. As much as it's easy to point out government waste, what we get from the government in exchange for our tax dollars is not bad compared to some others (we could always do better).

              Actually, if you look at that link in table form then you can see that our period of lowest taxation actually came during the Rudd/Gillard government and has had a YOY increase every year under the current Liberal government with the exception of 2019. I don't necessarily think that it's causal, but it's interesting none the less.

              • -1

                @macrocephalic: And the common factor is that they are all using the private central western bank systems

                • @Tonyh87: The banking systems, of course! That's absolutely something connected with the rates of tax economies apply!

    • +2

      https://en.cryptonomist.ch/2021/11/08/infrastructure-bill-ne...

      “ the bill will now require them to also report the receipt of any digital assets worth more than $10,000. Failure to do so within 15 days will be considered a tax offence.”

      It looks like they may be going after some of the “shadier” players in the market, in a similar way that they got Al Capone.

      • +3

        You mean the exact same thing you (your bank) has/have to do with cash transactions in a bank?

        Ie; a threshold transaction report. You may not know this but your bank does this every time you do this with cash

        • I do know it, but the link is referring to a new US bill, not any changes in Australian laws. Biden is going after crypto transactions which is going to have an impact on the market in the US.

      • The travel rule has been around for decades.

  • +30

    For the same reason the price of tulip bulbs crashed in 1637

    • +13

      Still HODL.

    • +11

      bitcoin has recovered from all the drops - its here to stay

      • +5

        They said the same about the tulips until the one that nailed the coffin.

      • I don't think it is going away. The risk is it gets large and boring, the bigger it gets the less it moves with even major trades. Eventually it barely move at all. It will be simply overshadowed by new cryptos being flavour of the month and FOMO drives then instead.

        The question is then what happens to Bitcoin. Smaller collapse and rebound cycles. It possibly slow long term degrade in value.

    • +13

      Not true, tulips at least have an intrinsic value due to being pretty and in some cases having a good scent.

      • What value do Tulips have when they wither?

        • +2

          They become fertilizer. What value does bitcoin have when it goes to zero?

          • -1

            @RiseAndRuin: I like the way you think. It shows that this industry is so young and nocoiners is ngmi.

          • @RiseAndRuin: Then just the fertiliser why do you need tulips?

            Why do you think BTC will go to zero?

            • -2

              @BuyOrNot: Every Ponzi scheme usually ends at some point, it makes no sense for it not to, since BTC's intrinsic value was always zero.

              • -1

                @RiseAndRuin: fiat currency also has an intrinsic value of zero

                • @Tonyh87: Whoever negged, why dont you try to prove me wrong?

    • It was a virus that ended tulip production, so no "crypto virus" yet.

    • +2

      So funny, Bitcoin rose 5700% in 2017 after it crashed 75% in 2014. It crashed another 75% in 2017 then went up rose 300% to 2021. Have you seen massive institutions, retirement funds, mastercard, visa, paypal and big 4 banks like CBA add the option to buy tulips? Price is having trouble crashing 75%, it's managed to crash 55% in May but then it went up another 80% since then to make a new all time high.

      This is clearly different to tulip mania which shot up 1000% and then crashed 99.99% in a mere 6 months and that was the end of that. Bitcoin only comes back stronger, again and again. I'm not saying that Bitcoin is the future as another altcoin is likely to take that spot. However, crypto assets are definitely the future. Why on earth would you keep your money with the banks at 0.5% interest when you can safely earn 10-20% interest in stablecoins with crypto?

    • +1

      Except tulip mania was, in today's terms, fake news

      https://www.barrons.com/articles/the-real-story-of-the-dutch...

      People may not understand bitcoin, but it is a reaction to the current monetary and political system. It can be the people's money - money which is not controlled by any nation state and which can not be controlled by any one person or group. Some people see it as an investment, an international payment system, a hedge against inflation, or a store of value in it's monetisation phase, etc. It's not going to take over the world but it will stick around, especially as a hedge against government sht fukery.

  • +2

    My understanding is that the value is only on the basis of supply / demand.
    If there are more sellers than buyers, the price will drop.

    • -2

      Same as the share market.

      • +13

        Share market you are actually buying a portion of an income producing business.

        Crypto derives it worth from…. Nothing

        • -3

          BRK.A hasn't paid divs since 1967.

          The stonkholders hodl hoping someone will pay more for it in the future.

          That's it.

          • @rektrading: And it's shares are worth 2 cents. About what Bitcoin will be worth in the future.

          • +3

            @rektrading: No, BRK.A holds assets. Rather than distributing the earnings each period they are reinvested into more assets. If you liquidated it then it would have value.

            • @macrocephalic: Like I said.

              The stonkholders hodl hoping someone will pay more for it in the future.

              That's it.

              • +3

                @rektrading: The concept is the same, hope to sell it for more than you paid, but it isn't really comparable.

                Each share in BRK has an underlying value as it is a piece of a company holding a significant amount of assets.

                What is the underlying value of BTC? Literally just hinges on someone paying more.

                Obviously it's more complicated than that, but it isn't remotely the same as holding shares that don't pay dividends.

        • +1

          In the crypto space you can do the same, just need to research what it actually is you're investing in. Sure there's meme coins which have nothing behind them except a bunch of people who blindly follow the latest trends but some (CHZ, AUDIO, STARSHIP, BNB, etc.) have real people running a real business making real money behind the scenes. I may not have a physical piece of a company in my crypto portfolio, but then neither does anyone who holds shares, it's all just a virtual piece of the pie.

  • +41

    People ar realising cryptocurrencies are a joke?

    They have no value, as anyone can create another coin that does exactly the same as all the others. Therefore infinite supply.

    • -13

      They have an initial value of how much electricity it took you to generate the coin and it's now allot more than years ago. The supply is slowing down as the coins are harder to mine.

      • +45

        A cost is not value.

        • Damn right bankrupt companies have a cost, scammers have a cost but what value do they have?

          I hope Charlie Munger lives long enough to see the digital turds crash and burn.

      • +1

        They have an initial value of how much electricity it took you to generate the coin
        I guess the Electricity producers must be raking it in then, printing their own 'money' plus charging others to do the same…

      • +1

        The supply is constant, it's the demand that is increasing. More demand (miners) means less share of the constant supply to go around. Whereas the federal reserve in the US, which is privately owned, can make as much money as they like without any physical assets required to back the currency.

        • +1

          There are infinite crypto currencies but the USD is backed by taxation powers enforced by a military. The only reason Bitcoin has any value rather than Bitcoin (copy) is faith. The entire value is predicted on finding someone else willing to buy it from you for above $0. But the US government will accept their currency to pay taxes. Absolutely there are potentially infinite USD as well, but that just makes it the same as cryptocurrencies. One might have a finite number, but there are infinite of them.

          • +1

            @jkart: It is not the US governments currency, they borrow it from the privately owned federal reserve. The US dollar also only holds value due to faith, if that faith is lost, no amount of taxation would be able to recover it. Also, I would think that the use of the military for tax collection would be a major breach of the Posse Comitatus Act.

            • @Tonyh87: You misunderstand. The military isn’t collecting taxes, they’re preserving the government’s ability to do so. The faith in the USD is backed by the militaries ability to prevent other nations from taking over the country which would send the value to $0. Fiat is faith based absolutely, but that faith is representative of physical institutions that have stood centuries. Those same institutions could in a moment outlaw conversion of crypto into fiat, which while not 100% effective would overnight make it nearly useless.

              • -1

                @jkart: The problem with fiat currency is that it is always lent to the government with interest. This means that when you lent the very first dollar in existence, the government then owes the PCWB that 1 dollar plus interest, therefore more money than is actually in existence. This is only sustainable for a short period of time as the interest is continually compounding, and the debt exponentially increases over the years and the whole thing ends up crashing down. The US Dollar has already lost over 96% of its value since 1913.

          • +1

            @jkart: Fiat money by definition isn't backed by anything (assets). It's a house of cards that will inflate and eventually pop like all other fiat money before it.

            • @rektrading: Individual units of it are not, just as individual cryptocurrencies are not. But the fiat currencies continued existence (as a whole) is contingent on the nation as a whole, not on fashion. Fiat can go poof when a country implodes, or be inflated away, but crypto can become as worthless as last weeks losing lotto ticket overnight.

            • +1

              @rektrading:

              Fiat money by definition isn't backed by anything (assets).

              It is backed by the government though, and the commitment to just the one national currency.

              I mean the government is very unlikely to declare the current AUD worthless and start AUD2 from scratch with no way to swap them over.

        • +1

          The supply is constant, it's the demand that is increasing. More demand (miners) means less share of the constant supply to go around.

          The supply inside one particular coin is limited, but the number of different coins is not. Anyone can download the software and start their own new digital coin.

          Just gotta pump the hype to get enough people interested and you have the next Bitcoin…

    • -1

      Nope, I'm sure if they get wiped out they'll come up with some conspiracy theory.

    • +8

      I think the extent of the joke was confirmed when the first country to accept crypto as legal currency was that paragon of fiscal and political stability El Salvador. To double down on the joke - the first Bitcoin funded city will be at the base of an active volcano…

      • +5

        El Salvador doesn't have fiat money. Making Bitcoin legal tender means that they can convert geothermal energy to sound money.

        They can then use Bitcoin to get loans and stick it to the IMF, World bank, BoE and the Federal Reserve at the same time.

        • ..and inevitably get invaded like Iraq, Afghanistan, Syria (and further back, Germany)

          • +1

            @LordSydney: The war machine only goes after oil-rich countries. There is no oil in El Salvador.

          • @LordSydney: .. are you implying there was an invasion of Germany because of their control of resources?

    • +3

      That’s nonsense, you can say the same about physical coins. They have value because value is attributed to them. If someone accepts bitcoin as payment then your bitcoin clone that nobody is buying won’t be a viable substitute. There is not infinite supply. At this stage it’s largely speculation, sure, but it’s incredibly obtuse to write it off as a joke as if it’s not at least as viable as any other form of currency.

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