The cryptocurrency market has reached unprecedented levels in 2021, but investors want to know the answer to this question: will cryptocurrency crash? It is not easy to predict the future, but it is more difficult to do so with virtual currencies due to their volatile nature.
With the expansion of Bitcoin (BTC) and other virtual currencies, many holders want to know if these assets would move higher in the coming years. In this guide, we will analyze whether digital assets can crash and if they could recover afterwards.
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It might be very possible for virtual currencies to crash again. Indeed, this is part of the normal market cycle for most of the assets that are traded in different markets. Virtual currencies are not different from that.
If we see the market ups and downs in the last years, we see that cryptocurrencies crash relatively frequently. This happens due to different reasons and in different circumstances. But there is a positive thing to mention: every single time that cryptocurrency crashed, then later recovered (when we analyse the global cryptocurrency market valuation).
There have been several crashes in the last years of more than 20%. Indeed, 20% crashes are relatively common in cryptocurrencies. These sudden crashes could become even larger if digital assets fall for consecutive days or even weeks.
For example, virtual currencies fall by around 50% between November 14, 2018, and December 15, 2018. This was one of the fastest and largest crashes in the cryptocurrency market. Thus, it is very common to have virtual currencies that crash on a regular basis.
Yes, cryptocurrencies will crash again. Not once, but many times. It is important for investors to know that and get prepared to reduce our risks and exposure to the crypto market if we are not able to tolerate a price crash.
Most of the time yes, but it might be possible for some cryptocurrencies to never recover. We need to distinguish between those virtual currencies that have a serious project behind with a large and engaged community with projects that focus on marketing and on quick gains.
Depending on the project, we can then understand whether it would be possible to recover or not. In the cryptocurrency market, there have been tokens released through Initial Coin Offerings (ICOs) and that many of them skyrocketed in just some days. Then, their price crashed but they could never recover, and they will never do.
These crashes literally killed projects that, since the beginning, were expected not to become popular and adopted. Crashes tend to be positive considering they take away from the market projects that would otherwise grow in bull markets (only).
If instead, the cryptocurrency is large and it has been in the market for several years, then, there are large possibilities they will recover. They might take a long time to reach their all-time high again, and they might never reach it, but they could bounce from a local bottom after a crash.
Bitcoin and Ethereum are examples of virtual currencies that might recover after a crash. BitConnect is an example of a scam coin that would never recover from a cryptocurrency crash.
Will cryptocurrency crash and fall again? Yes, this will happen forever. Cryptocurrencies will crash once and again in the coming years. The question is not whether this will happen or not. The question we should do is “when will cryptocurrency fall again?”
To answer this question, analysts should have a look at different indicators and market data. There are many ways to do so but no clear answer on how to properly predict a crash. We know that it will happen, but it becomes definitely difficult to understand how big the crash would be and how long it could last.
Cryptocurrencies are volatile and are subject to market conditions. Crashes are different every time and they have different characteristics. They are also usually triggered due to different reasons that might not repeat again in the future. We should be prepared as investors to deal with and handle these crashes. Those investors that are ready to profit from them will be the most benefited.
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