You probably already know what Bitcoin is and are considering investing in it by the time you start researching its value. The price of this cryptocurrency reached an all-time high at the end of 2020 and the beginning of 2021. At the time, its value was more than $60,000, and many people were wondering what would happen to this virtual currency next. Will the price of Bitcoin fall to zero?
Bitcoin is down 70%, raising concerns about a total collapse.
At the height of the coronavirus pandemic in 2020, the price of oil in the United States fell to minus $37 per barrel for the first time in history. It meant that oil producers had to pay buyers to take the commodity off their hands because they were concerned about storage capacity running out. Oil demand fell as a result of lockdowns that kept people at home.
As the price of bitcoin fell sharply last month, both traders and miners were keen to sell their holdings in order to avoid taking massive losses. And, perhaps worst of all, a LUNA-style collapse.
Bitcoin has dropped 70% since peaking at $69,000 in November 2021. BTC was trading at $20,400 at the time of publication, having recovered from an 18-month low of around $17,800. This is less than the price of $19,000, a high reached in 2020 before a "halving" event that reduces the amount of bitcoin minted.
The crypto market's destruction is caused in part by macroeconomic forces such as rising inflation and a chain of interest rate hikes by the US Federal Reserve. Furthermore, Terra's contagion is just getting started, with a number of crypto heavyweights, including hedge fund Three Arrows Capital (3AC), lenders Celsius, and Babel Finance, experiencing solvency issues.
Will Bitcoin price go to zero?
Some experts have examined the possibility of Bitcoin's value collapsing to zero within a day. Historic Bitcoin returns have assisted such experts in calculating the risk-neutral disaster possibility, and they have not ruled out the possibility of this virtual currency collapsing to zero.
However, some experts believe that due to its lack of intrinsic value, this virtual currency will eventually lose its value. On the other hand, supporters argue that mathematics and consumer confidence support Bitcoin.
While most people contrast Bitcoin with traditional government money, both fiat currencies and Bitcoin lack the physical commodity that once backed them, such as gold. As a result, they, too, have no intrinsic value. Nonetheless, some argue that debt helps the US dollar.
Arguments against Bitcoin
One common argument against Bitcoin is that it is an elaborate scam run by a nefarious group or entity to steal people's hard-earned money. Some even claim that Bitcoin is a modified Ponzi scheme.
Furthermore, some claim that Bitcoin is not decentralised. On the contrary, Bitcoin is controlled by a central developers' committee. Only those in positions of power stand to benefit from this virtual currency. This argument, however, overlooks the fact that competent individuals can submit Bitcoin Improvement Proposals for consideration. Furthermore, if they discover unfavourable changes, users can fork the entire protocol.
Furthermore, all miners and nodes can select which client to use. The canonical chain is ideally formed by a client with more combined work. As a result of the resources and computational work involved in maintaining the network's integrity, Bitcoin units on these chains always have value.
Other sceptics argue that Bitcoin is overvalued because it lacks utility. However, this is not the case because Bitcoin has a growing user base. Satoshi Nakamoto originally intended Bitcoin to be a peer-to-peer payment system. Online trading, on the other hand , is now the thing that everyone wants to do with Bitcoin.
Final Thoughts
Whatever happens, Bitcoin will almost certainly have value. The only thing that can cause Bitcoin worthless is if all governments outlaw it. This consensus, however, is nearly impossible to achieve. People would still be able to access their digital wallets and crypto exchanges online . The Bitcoin network's globally distributed nodes and decentralisation give Bitcoin value, particularly its blockchain proposition. As a result, while Bitcoin may lose some of its value, it is unlikely to lose all of it.
