Experts expect a new wave of the financial crisis, and the media write about the bursting of the Bitcoin bubble. The paradox lies in the fact that the stock and cryptocurrency markets alike are subject to cycles. Bitcoin correction is commonplace, and not a horseman of the Apocalypse.
One of the largest in the history of world financial crises happened in 2008. It was caused by the collapse of the mortgage obligations in the United States. What could cause the next recession? The head of the Federal reserve Janet Yellen (Janet Yellen) believe that the new culprit is corporate debt — again in the United States. Over the past eleven years, the debt increased 4.9 to 9.1 trillion dollars.
The crisis of 2008 inspired a film Studio Paramount the creation of the film “shorting” (The Big Short, 2015). Trading is so arranged that in the fall too, can make money. At a time when the public believes in perpetual growth, when the real estate market recoilless flying to the moon, there are traders who risk all their funds in order to bet on a market collapse.
Compared to traders of the stock market of the middle of the two thousandth, we are in a more advantageous situation, because the correction of Bitcoin — it is far not a unique event. History of Bitcoin knows four market cycle:
1. 2011-12: a 48-week upward trend.
2012: a 22-week downtrend (-93%).
2. 2012-13: 72 weeks uptrend.
2013: 12 weeks downtrend (-80%).
3. 2013: 20 weeks uptrend.
2013-14: 58 weeks downtrend (-86%).
4. 2015-17: 152 weeks uptrend.
2018: 52-week downtrend (-84%).
It is easy to calculate that the average correction of these cycles was about 86%. Thus, the current Bitcoin market cycle shows price reduction that can not be called extreme. It is quite common for major cryptocurrencies.
The study of history is useful because it allows you to predict how deep can drop Bitcoin. In the case that the correction will amount to 86% in 2014, price will fall to $ 2800. Finally, in the limiting case (correction 93%) we have a chance to see Bitcoin at $ 1400, however, it is clear that this is the least likely scenario.
The current century has examples of much more severe drops in local markets. Imagine that in 2013 you impressed by the fact that the power in Venezuela came President Nicolas Maduro. You decided to make an investment and put, say, one million dollars in Venezuelan bolivars. If you are standing, it is best to get: today a million dollars you would still be 37 cents (correction 99,999963%).
The stronger cooling of the cryptocurrency market, the more you hear talk about the fact that the current correction in Bitcoin plays an important role trade outside exchanges. In English-language publications off-exchange trading is commonly referred to by the acronym OTC (Over-The-Counter).
In November 2018, the head of the exchange Binance, Chanpen Zhao (Changpeng Zhao) said that the OTC-market, at least not less than the stock market. If we compare this statement of the head of the largest data website Coinmarketcap about capitalization and daily volume of trade Bitcoins, we can conclude that every day, about the eighth part of all the in circulation bitcoin change for their owners outside the stock exchange.
The OTC gives the opportunity to conduct significant transactions in bitcoin without a significant impact on the exchange rate, however, that exchange rate is a guide for anyone interested in the current state of Affairs. It turns out that this course is not a market, and it may be artificial, due to the collusion behind the scenes, OTC. Shady deals allow you to buy Bitcoin from miners, not obvalivaya its price on the exchange, and at the same time accumulating on the cold wallets huge amounts of cryptocurrency, we need to manipulate the exchange rate. To coordinate these steps allows the mechanism cryptopedia: before every major price movement of the owners of big purses get small transfers of Bitcoin, encoded commands on the sale or purchase
Year ago started trading futures bitcoin. On since then, full correction you could very well earn. It was enough at the peak of prices to bet on a fall and close the deal at the end of 2018. In contrast to the situation in the middle of the two thousandth’s, when the mortgage crisis still seemed unimaginable event, this short would not require a trader impartial thinking and courage. It was enough to wield the levers of OTC trading in Bitcoin.
Experts in the field of trading have the same opinion on how the market will react cryptocurrency to a new financial crisis. They say that many of the investments in the crypt are venture in nature, that is, use the means of external investors. So as soon as there are problems of a global nature, the first sector, where capital will flee, will the cryptocurrency market.
“Future generations will remember the year 2019 as the beginning of an era of new possibilities.” (C) John McAfee
But there is another point of view. The recession of 2008 was the strongest since the great depression, and it led to the creation of Bitcoin in 2009. The coming world crisis will strike first of all on Vietnam currencies — the dollar, Euro, pound, yen — all the money that is not backed by precious metals. All known in the history of mankind Fiat currencies have turned to zero, and they were provided only with confidence in their governments.
Venezuela seeks recovery from hyperinflation in bitcoin El Petro. Many countries will follow the example of Venezuela and will launch its own national currency, minted in the blockchain. Bitcoin will claim the role of a quiet harbour in the world.