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The impact that the fall of cryptocurrencies has generated for Bitcoin System Auto-trading app and investors of large corporations has been quite significant; what many have not investigated is that in the past, there were casualties that even touched a floor that took it to almost zero.
This July marks almost eleven years of having reached extreme values not only in its market capitalization but also in its price.
Bitcoin price timeline
On June 11, 2022, it will be eleven years since Bitcoin experienced one of its most substantial falls since it was created after its value had experienced a maximum historical value of more than 3,000%.
Its value reached 0.3 dollars per unit and a maximum of 1 dollar. It has been the most challenging stage in Bitcoin valuation. Still, this trend was quickly corrected, triggering the price in a bullish rally at 35 dollars.
Trend changes in digital assets are usually abrupt and then develop an inverse trajectory to the one it has in a certain period.
This period was identified as the first Bitcoin bubble; this term refers to the resounding rise that financial assets can have, which are later affected by the high demand, and their values drastically decrease.
Although this period’s recovery was extended, it took almost two years to develop its cycles, usually between bullish and bearish trends.
What causes bubbles in cryptocurrencies?
The correct term given to the falls and rises in the price of financial assets is speculative bubbles.
This economic phenomenon is characterized by a disproportionate increase in the value of a digital financial asset, which leads the price to an unexpected maximum level.
After this, the speculation generated between users and investors decreases the euphoria regarding acquiring these assets, so investors lose confidence in the credibility of the market.
Subsequently, panic is generated where all those with digital assets decide to sell to avoid losses on a larger scale.
At this point, Bitcoin suffered its first bubble due to having been involved in illicit negotiations. Still, the eyes of the hurricane are always on Bitcoin.
Although it was quite a problematic phase since its decentralized nature and without the control or supervision of a financial entity, the operations were linked to handling illicit money and money laundering.
The controversy around Bitcoin usually has an effect on its price, which implies that any public position of any entity or businessman will directly affect the valuation, as is currently happening with the measures taken by the Fed.
As the crypto winter passes, the trends will improve for everyone
The macroeconomic scenarios may not be the most optimal. Still, you can be sure that the indicators will vary and turn in favor of cryptocurrencies.
The duration of this downtrend is a bit difficult to know how long it will last. Still, at the end of every cycle, the price changes will positively affect all investment levels.
The scenario is entirely different today; the economic measures to combat inflation, the effects of the war, and the high supply of crypto assets have generated a non-beneficial situation for Bitcoin and other cryptocurrencies.
The extreme last fall of Bitcoin represented almost 95% of its price; to date, Bitcoin has touched a little more than 40% of its price since it has decreased and increased, although in a small proportion, but has shown its intention to recuperate.
The fear that exists in the face of the total loss of cryptographic investments is understandable; that is when the appropriate strategies will allow operations with digital assets not to decapitalize their users.
Despite this negative situation that makes cryptocurrencies look even more volatile and risky, enthusiasts assume that this trend will stop. The rise will come, but a downward cycle may be repeated, as has happened on other occasions.
Conclusion
All financial assets, whether traditional or digital, are subject to the typical volatility of the market; this does not indicate that they are all a bad option for a refuge of capital; on the contrary, the movements they experience suggest that the markets are changing and external factors influence in various ways.
A turbulent market can represent a good time or not so much, depending on the general environment.