The search term ‘Bitcoin Crash’ is trending — Here’s why

 The digital gold, aka Bitcoin, has been marked “dead” at least 458 times since 2009. However, BTC proved to be more than alive each and every time.

Last year, the word “crypto” was trending all over the internet as the crypto market was generally flourishing. 

However, now it appears that the good fortunes of digital coins havee waned as cryptos have slipped into a serious bear market. Bloomberg recently reported that while the short-term investors wasted no time in dumping their holdings, even the old-timers are now exiting the scene.

What triggered the latest Bitcoin crash?

Bitcoin has slipped nearly 70% from its November record high, but it all started in March when CNBC reported that the Federal Reserve approved its first rate hike in three years. That singular act went on to be a major turning point, putting downward pressure on risk assets like Bitcoin. Meanwhile, a series of other events soon followed that also impacted the crash of Bitcoin, including Russia’s invasion of Ukraine and the Terra crash.

Rob Schmitt, chief operating officer of infrastructure provider Toucan, told Cointelegraph:

• “A combination of macro headwinds, such as increased interest rates and geopolitical uncertainty, has triggered a broader market downturn that has caused a major delegating event in crypto markets. Specifically, the implosion of Terra and the following insolvency/deleveraging of Celsius and Three Arrows Capital, has forced the liquidation of large amounts of BTC, which caused a price crash.”.

First Digital global digital payments firm CEO Vincent Chok insisted on the Luna Classic (LUNC) collapse being the major cause of the crash. He told Cointelegraph:

“This is a part of the normal market cycle. The primary trigger was not geopolitical conflict, but the LUNC collapse and the systemic risks associated with the large exposure to this token.”

The collapse triggered margin calls for hedge funds and defined liquidity positions. Chok added that it’s part of the super cycle of the industry, an evitability of the bull run. Something had to be corrected sooner or later, he added.

Crypto will survive

Bitcoin has been written off as dead at least 458 times in the past. But each of those times, it has managed to come back to life. 

Kevin Owocki, founder of Gitcoin DAO — a platform for funding open source Web3 projects — told Cointelegraph:

• “A combination of macro headwinds, such as increased interest rates and geopolitical uncertainty, has triggered a broader market downturn that has caused a major delegating event in crypto markets. Specifically, the implosion of Terra and the following insolvency/deleveraging of Celsius and Three Arrows Capital, has forced the liquidation of large amounts of BTC, which caused a price crash.”

Crypto will survive

Bitcoin has been written off as dead at least 458 times in the past. But each of those times, it has managed to come back to life. 

Kevin Owocki, founder of Gitcoin DAO — a platform for funding open source Web3 projects — told Cointelegraph:

• “Bitcoin has been declared dead hundreds of times in the past and, so far, these commentaries have always been wrong. If the past is any guide, Bitcoin is not dead. I don’t want to get into price forecasts, but my focus has always been on the future of what Web3 can build and how those tools can provide solutions to global problems that humanity faces.”

The impact of crypto on the economy

Institutional involvement in the crypto market’s last bull cycle has sparked fears that the broader economy may potentially be affected. 

Many companies have had to lay off a sizeable number of their employees, and others are looking at potential insolvency. Additionally, a recent Pew Research Center survey found that around 16% of U.S. adults have in one way or another been involved with cryptocurrency. So to an extent, there is a certain amount of national exposure to the current situation of the crypto market.

However, not everyone believes that the crypto market situation will impact the broader economy. In an interview with CNBC, Joshua Gans, an economist at the University of Toronto, said:

• “People don’t really use crypto as collateral for real-world debts. Without that, this is just a lot of paper losses. So this is low on the list of issues for the economy.”

How long until BTC bounces back?

Going by past trends in the crypto market, the present situation may take weeks, months, or possibly years to reverse, and while the Bitcoin price is suffering at the moment, that should not take away the fact that it is still up 31,437% over the last nine years. In fact, it was currently more than double its price two years ago. Owocki said: 

• “At Gitcoin Holdings, we know that it may take some time for the general market to recover — but we do not know exactly how long or which assets will recover. It could be five weeks, it could be five years. We are focused on creating value for the long term.”