Will Bitcoin drop to $0?
While there are many who believe that bitcoin will increase to over $100,000, I believe that bitcoin is likely to trade within a range of $15,000 and $50,000 in the near future.
My reasoning is primarily political - since governments have, historically, over the past few years taken many freedoms away from their citizens.
By restricting people's access to money and also taxing wealthy individuals, I think governments will try to make Bitcoin illegal in a specific country or they will try to regulate and tax Bitcoin.
As a result, I think that there's a decent amount of risk in holding cryptocurrency.
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Will Bitcoin Drop to $0?
I believe the overall cryptocurrency market capitalization is less than the total market capitalization of a stock like Apple.
The cryptocurrency market is still relatively unregulated, this adds another element of risk (although it's true that government regulations tend to make things worse).
I think it's important to study history.
During the Great Depression some banks failed and many of these customers lost all of their money. Currently, in some countries, whether it be Argentina (back in 2001 or 2002) or more recently in other countries - people are becoming significantly less wealthy due to massive inflation and job losses.
Another important item to consider is that many people are disorganized. It's common for people to simply lose their cryptocurrency access codes or have their cryptocurrency stolen.
Even so, there are definite advantages to holding cryptocurrency as a hedge against fiat currency. Having some money outside of the financial system, either in physical gold or Crypto is a smart idea. Decentralized finance is not going away.
In Canada, the government "turned off" access to some of their citizens bank accounts. If this can happen in Canada, then it can happen elsewhere. As a result, it's wise to have some money outside of the traditional, highly regulated, large banks.
If I had to choose one cryptocurrency, it would be Bitcoin. If I was creating a portfolio of cryptocurrencies, I would likely hold ~65% in Bitcoin and 35% in Ethereum. Personally, I wouldn't touch any of the other coins because I believe that the risk is too high.
Where I disagree with many, is that I don't believe that Bitcoin, or Ethereum, will soar in price.
Whereas previously, the price of BTC and ETH was highly volatile, it's currently that nearly as volatile as it was before.
I would be happy to trade options on Crypto and sell puts on BTC with a strike price of around $15,000.
Let me know your thoughts on what price you believe Bitcoin and Ethereum will trade at in the near future.
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Conclusion (Can Bitcoin Fall to Zero?)
Bitcoin is risky and governments seem motivated to restrict the freedoms of their people.
As a result, there are positives and negatives with holding cryptocurrency (as there's major political and regulation risk, although there's also major political and regulation risk of holding your money in banks).
My gut feeling is that Bitcoin will become similar to gold. It will hold its value and become similar to an "online gold coin".
Recently, as of June 2023, the volatility of bitcoin and Ethereum has decreased - therefore it seems like a more stable investment than it was previously.
Frequently Asked Questions (FAQs)
Can Bitcoin Become Worthless and Fall to 0?
Yes, theoretically it can. But, in reality, it's highly unlikely.
I look at Bitcoin, or Ethereum, as an "online gold coin", it's a good way to diversify your assets.
Are Other Cryptocurrencies Like Ethereum Better?
I believe that both Bitcoin and Ethereum are relatively safe (from a cryptocurrency perspective), at this time (June 2023), I wouldn't own other cryptocurrency assets.
Will Bitcoin Increase to $1 million?
Hypothetically, yes. But the probability is extremely low.