Hey there! Welcome to yet another article, today we are discussing if crypto will crash to zero this year. The peak of interest for this article comes from a post by the European Central Bank claiming that bitcoin is on its last breath before falling to irrelevance. We decided to make a quick article to cover our perspective on the matter. Please keep in mind these types of predictions are purely speculative and as such it's always recommended to DYOR!

The Crypto Crash of 2021

In 2021, following the collapse of terra luna, cryptocurrency prices began taking a nosedive. This led to a lot of bankruptcies of other larger players such as "3 Arrows Capital". Later, this caused a lot of withdrawals from cryptocurrency exchanges, which led to many more bankruptcies. We call it the second great crypto bank run. This was a domino effect which lead to a big crypto crash.

Is Bitcoin heading to irrelevance?

The truth is, bitcoin performs it's task as it has. The view on bitcoin changes, but the limited hard capped supply remains the same. Bitcoin, like other currencies relies heavily on support and speculation. Thus, as people believe in the asset, use it more, and have it more readily available, the price naturally rises. Therefore, we don't believe that this crash is not the end of crypto. As long as there is demand, crypto assets will have value. This value depends highly on the tokenomics of a given cryptocurrency. If the currency has a smaller supply than demand, the price will rise. Likewise, if the demand is lower or there is a growing supply shock, the price naturally decreases.

What we saw in the past two years in crypto, was multiple supply shocks hitting the market at various points. This could cause the crash of crypto to continue due to speculative sales. Or could cause the markets to rebound due to a huge new surge of adoption.

As always, DYOR!