The Next Bitcoin Crash Will Be REALLY BAD (Bitcoin Might Not Recover)

The Next Bitcoin Crash Will Be REALLY BAD (Bitcoin Might Not Recover)

Hey guys, it's sasha, everybody is watching the bitcoin price chart trying to figure out where it's going. The price is 48 down after the bitcoin crash from its all-time high in april, but it's also 200 up in the last 12 months. Some people are predicting an immediate bounce to maybe a hundred thousand dollars by the end of the year. Maybe higher others are saying that this is the beginning of another four year cycle that follows every one of these bitcoin crashes as we wait for the next big price ramp, but the truth may actually be much worse. Bitcoin might be approaching a crash that will be far bigger than anyone expects, causing its price to plummet all the way down from its current, very high thirty four thousand dollar price tag, and the cause of this crash will not be the government's regulating it. It won't be the banks killing the competition. It won't be any of the obvious things that people are citing. I actually think the truth might be far simpler in this video

I will explain why the biggest bitcoin crash we have ever seen may be coming soon, except for people who dismiss cryptocurrency as a meaningless fad. Most people would agree that bitcoin and cryptocurrency in general is a new type of asset class. Now asset classes are different. Sorts of ways of storing and in some cases, potentially growing, the value of your money, cash itself dollars are an asset class. You can keep money in a bank account or under your mattress or wherever you like. Another popular asset class is stocks and equities. You can buy a small part of a company and then there's commodities, real estate and the actual ownership of businesses, and each of these asset classes behaves in a different way, they're all different to each other. They all have their unique features, pros and cons, but they are not independent, and this is really crucial to understand, because just because you're invested in a different asset class does not protect you from major issues fluctuations or something bad happening in a different asset class

They are all intrinsically linked. If one asset class begins crashing, it will send the other asset classes spiraling as well. If a country's currency begins spiraling out of control, the stock market in that country and the property will usually follow that currency down the drain, but assets like gold can actually benefit as people's confidence drops and other glasses plunge. Gold tends to actually do quite well. A stock market crash can bring other assets down with it directly or indirectly, indirectly, through government policy. The government can, for example, begin starting to print money and the yield and treasuries can collapse. Bitcoin is an asset class that many people compare to commodities like gold. It has a limited supply. Supply is fixed and sure you can find more gold through mining, but just like bitcoin

There is only a finite total supply of it on the planet. Bitcoin only has a limited supply and light gold. Many see it as a way of storing value for the long term in a way that is independent of the markets, independent of fiat currencies and government interaction. If the government prints a load of money, the thinking is that it won't affect the price of bitcoin. In fact, the price of bitcoin will simply go up as the feared dollars devalue, but the truth is this: the cryptocurrency asset class is not immune to what happens with other asset classes and in fact it is very strongly correlated to what happens with fiat currencies

The stock exchange and all the other types of assets as well, and here is something that is so obvious that most people don't realize it. We haven't actually seen yet how strong that correlation is because we haven't had the most obvious bit of evidence. It'S because we haven't had a major market collapse, since the bitcoin white paper was first published. Bitcoin'S genesis block was mined on the 3rd of january 2009. It'S about four months after liam brothers collapsed during the 2008 financial crisis. At that moment, the stock market was almost at the very bottom

In fact, the first bitcoin block had a phrase embedded in his coinbase. That said, chancellor, on the brink of second bailout for banks. This referred to a headline in the times the uk newspaper on that very first day as the uk, along with the us, was going through the fallout of the 2008 financial crash in the months after it, and since then, we've had ups and downs. Bitcoin has had huge spikes in value that happened every four years or so. Bitcoin has hit 1100 in december 2013 over 19, 000 in december 2017 and over 64 000 in april 2021, very very recently, and each time the bitcoin price went and crashed back down

After that peak and the holders had to wait four years until the next peak history sounds like maybe it's repeating itself, but amazingly all of these price bikes and crashes happened without the other asset classes. Doing anything much at all the stock market pretty much completely ignored. What was happening with bitcoin and that's not surprising, the total value of just the us stock market alone is about 47 trillion dollars, and the total market cap of bitcoin is only 630 billion at the moment. But in march last year the stock market did wobble and we did have a crash, so we have one interesting little period to look at as the pandemic brought uncertainty and panic to the u.s stock market

It crashed from 3 386 points on the 19th of february 2020 to just 2237 points on the 23rd of march. That'S a 34 drop in value in one month. So what happened with bitcoin over that month? Well, on the 19th of february, the high price of bitcoin was about 10 200 and on 23rd of march it dropped to 5 800. That'S a 43 drop much higher than the stock market, and in fact, in the middle of that panic, the price actually dropped. A lot further, it dropped to below 4 000. On the 13th of march. That'S a drop of 62.5 from the peak, unlike most market crashes, the stock market rebounded very quickly, in this case very unusual. We have had one of the fastest recoveries in the stock market. Ever and bitcoin went on a huge run, all the way to this all-time high. At the same time, during that bull run and as that happened, everyone forgot what happened in march and people didn't draw any important conclusions at all

Whether people want to admit it or not, the confidence in the global financial system has a huge effect on the price of bitcoin. The stock market has a huge effect on the price of bitcoin government's monetary policy, people's confidence and the performance of the s p. 500. All have a very big effect on the price of bitcoin, and if that confidence and the value of the stock market crashes, it will bring bitcoin down with it and, as we saw in the march crash last year, bitcoin gets hit a lot harder than the market

That brings it down. Bitcoin lost almost double the value that the stock market lost during that crash and what would have happened if the stock market didn't immediately rebound? How much further would bitcoin drop then here's the chart of the s p 500 since bitcoin was born. Now sure there are some fluctuations, but the chart starts at the bottom, after a major financial crash and over the 12 years it's only really going up and yes, bitcoin has gone up way way more than the stock market, much more than the 372 percent that the Smp 500 grew during that same period, but over the same period. Gold has only increased in value by 50 percent in total and was worth about as much in september 2018 as it was in january 2009. So the way the bitcoin behaves and its interactions with other asset classes don't seem to make it look at all similar to gold. People don't flock to bitcoin during a period of financial instability during that 2020 market crash, while the market lost 34 percent and bitcoin lost 62 percent, the price of gold went up by 22 percent over 2 000 per ounce

The stock market has been on the biggest bull run in history, and many people would argue that it is currently severely overheated. At some point is a crash is going to happen because the stock market crashes happen. That'S pretty much a certainty, but the question is: when will it happen? Although some say it's imminent, the truth is, nobody knows it could happen in the next few months. It could happen next year could take a few years before we get there, but the period from 1982 to 1995 also saw the stock market go on a huge bull run, rising in value by 200, and a lot of people back then was saying that it's very Very hot and a crash is imminent, and that period also included a huge crash in 1987 that rebounded within just two years, that's pretty fast, but nowhere near as fast as in 2020 and at the end of that period, when everyone's saying the market is very hot, It went on to hit ridiculously higher highs yet so we could still be some time off, but anyway, what? If the next crash looks not quite like the 2020 march crash, but more like 1929 or 1973 or 2000

What if the confidence erodes more and we start a period of years or maybe even decades, waiting for the rebound to match the previous all-time highs? In those crashes, the market can lose 50 to 60 percent of its value, and it has done before a lot more than the drop that we saw in march last year, and bitcoin has shown that it can amplify market swings, and this is really important when the Market goes up, bitcoin goes up by a lot more when the market crashes, bitcoin crashes, a lot more

So in that scenario, where we get to a market crash, whenever it comes this year next year, whenever it decides to turn up, if the market drops by 60 say there is every chance the bitcoin will go and amplify that loss to more, like 90 or 95 Of its value - and yes, it can happen over half of the companies in the bloomberg internet index lost over 80 percent of their value during the dot-com bubble. Those were big tech companies at the time, amazon's shares dropped from 113 dollars to just five five dollars. So if the market crashes, there is every chance, there is a big chance that bitcoin will crash very hard companies and people will be going through very tough periods. They will be pulling money out of speculative assets out of anywhere so that they can use just to make their ends meet, so they can pay their bills and they'll be a huge exodus of money from bitcoin and crypto in general. If that were to happen and as the price plummets, the issues that bitcoin is suffering from today will only amplify themselves. Questions about its energy use

Adoption real world use cases can become much more prominent and may not be viewed as positively by people who just lost all of that value, and this can lead to major questions about bitcoin's utility. It is very possible that, as a result, people are going to kick bitcoin really hard while it's down, and that would be a very opportune moment for the focus to switch. It could easily switch to a different cryptocurrency. I don't know which, because there's a lot of different nuances that may play out differently, but one that may be used as proof of stake and doesn't need crazy amounts of electricity to operate

Maybe one that can process far more transactions more quickly, maybe one that can offer other benefits. New advanced blockchain designs that offer new features and new functionality, and there is every likelihood that a crash would push the switch over and bitcoin may then, if that switch over happens, never ever recover after a crash wipes out the value of companies, people are still left With a share in a business that is making something that is selling something that is earning revenue, that is earning a profit, their share of that business still remains the same, and it still gets the same share of that company's future cash flows after the market crash. As it did before the market crash, if property prices collapse, people will still need land and houses to live in and the utility for property cannot disappear

But in 12 years that we've had bitcoin, we haven't actually tested its fragility. It sounds crazy, but we've seen bitcoin recover from a stumble sure we've seen the ups and downs, but we haven't seen what happens when it really falls down hard at the moment. Bitcoin is the preeminent leader in crypto. It has the most adoption, the most holders and the highest value, but unlike businesses, unlike property, unlike gold and other asset classes, if the value disappears, there is no real underlying utility, which guarantees a bounce back. A different cryptocurrency or another asset class born out of the next crash that is somehow better and offers even better features, could easily take bitcoin's place, taking advantage of the situation, and if that happens, that bitcoin that you were buying for 34 000 might seem like a Very strange, very awkward, hazy dream. I hope that gave you some food for thought. If you like this video, please don't forget to smash the like button for the youtube algorithm. Thank you so much for watching. I really really appreciate it and, as always i'll see you guys later,