It is no secret that March 12, 2020 was one of the darkest days in the history of cryptocurrencies. This was the day Bitcoin (BTC) experienced one of the biggest single-day price drops in its ten-year existence, from $ 8,000 to a staggering $ 3,600 low, albeit short, in just a few minutes.
In comparison, more than $ 1 billion of bitcoins were liquidated in just 24 hours, resulting in one of the largest drops in value the digital market has seen in its short history. Another way to look at the vulnerabilities is that BTC has lost nearly 50% of its value over the specified time period, and the stats are amazing to say the least.
It is also worth noting that during the same week, Bitcoin and several cryptocurrencies showed a very close correlation with the US stock market, which was seen as an opportunity at the time, due to the general decline in investor appetite for riskier values. … especially when the COVID-19 pandemic was just starting to raise its ugly head.
The sharp correction in the US stock market, which produced the Dow Jones Industrial Average 2,300 points, was the worst drop in the past 30 years. This correction, combined with the lack of demand for BTC, drove the price of the cryptocurrency first to around $ 5,000 and then to around $ 3,600.
Will there be another bug?
To investigate the possibility of the cryptocurrency sector experiencing a significant downturn again this month, Cointelegraph reached out to CryptoYoda, an independent analyst and expert in the cryptocurrency space. In his view, the triple combination of limited supply, ever-increasing demand, and hugely exploited trade is a recipe for crash and turbulent volatility, adding:
“We will continue to see many temporary disruptions along the way because the markets have a way to regulate and balance the strong sentiments of both individual and institutional investors and traders. It’s just that we’ve never seen an experiment on such a massive scale, with limited supply along with insane demand and explosive tools.” That can make this trip very bumpy.
Hunter Merghart, head of cryptocurrency exchanges at Bitstamp in the US, noted that while the structure of the cryptocurrency market has changed dramatically since March of last year, the possibility of a completely new meltdown cannot be ruled out. However, he mentioned that the cryptocurrency industry is now full of regulated spot trading platforms, and derivative platforms that provide a high level of liquidity.
Additionally, Mirgaard believes there are many more active participants in the global crypto scene compared to previous years, who can help mitigate the imbalance if volatility suddenly increases overnight for unforeseen reasons.
Anchol Dahir, Co-Founder and CEO of EasyFi Network – a tiered DeFi lending protocol for digital assets – pointed out to Cointelegraph that a huge amount of capital is currently locked into decentralized financing, and the total market value of the crypto industry is over $ 1.5 trillion. However, when talking about this number, Dahr indicated that most positions have been changed up to 50 times.
It’s different this time, completely different
While there is some fear of the possibility of a cryptocurrency, the sense of the cryptocurrency space appears to be calmer this time. For example, Chad Stinglas, commercial director of the US cryptocurrency trading platform Cross Tower, believes that even if the anniversary of such a dangerous “bottom” comes, there is no need to worry about a repeat of this scenario. Myself:
“Although March 2020 was a dark time for cryptocurrencies, as well as for all global markets for all assets, he was the one who came right after he came up with the definition of digital assets. The Fed’s rapid and massive intervention to support liquidity in financial markets was exactly the activity that made Nakamoto saw it as a writing on the wall after the major financial crisis of 2008 that prompted him (or she) to create Bitcoin in the first place. ”
He also expressed his belief that the Fed’s response to COVID-19 was a confirmation of the original message behind Bitcoin and began the bullshit that had been going on for 11 months. Steinglass said the Fed has shown no signs of tightening monetary policy, and even Congress, despite the party’s impasse, has shown that it will continue to stimulate the economy until the coronavirus recession is completely over. Mirror.
Plus, with the steady stream of institutional adoption – with a major new traditional asset company announcing its support for digital assets, seemingly every two weeks – there don’t seem to be any major reforms for whatever reason other than a little.