Could Bitcoin go to ZERO?

Could Bitcoin go to ZERO?

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As the economists say, Bitcoin is going “up and to the right”. For less than a decade the price went from $0 to the amazing $60 000. The first cryptocurrency has the largest market cap among its relatives and is one of the most profitable assets of all time.

Despite these facts, Bitcoin has its opponents. They strongly believe that it is just a matter of time before the price goes back to ZERO.

One of the detractors is Warren Buffett – CEO of Berkshire Hathaway. In an interview for CNBC, he said that all cryptocurrencies are worthless, even Bitcoin. His business partner  – Charlie Munger – has the same viewpoint. According to him, crypto is the “rat race”.

On the other hand, during the last months, many institutions started their digital asset adaptation. Mostly they invest in Bitcoin. The crypto exchanges announced a significant number of new individuals using the platforms and more surprisingly more companies coming into the space. Some of the big firms are MicroStrategy, Tesla, Balthazar, and Square. They bought Bitcoin in order to protect their cash from the devaluation of the dollar.

First North America Bitcoin ETFs, which were launched in Canada, are also showing significant growth. Purpose (one of them) boomed in its first trading hours reaching $80M.

The price of the asset hits AHT after AHT. The Bull market continues and the market cap of Bitcoin is even more than $1T.

Is it possible for the price to drop 100% and go back to $0?

In 2018, two Yale University economists (Yukun Liu and Aleh Tsyvinski), published a report about digital assets and its price. The name of the report is  “Risks and Returns of Cryptocurrency” and according to the mathematical calculation the price of Bitcoin can crash to $0 in just one day.

The economists used Bitcoin’s historical returns till that time to find the risk. The possibility for the leading asset to go to zero is between 0% and 1.3%. This may seem insignificant to us but according to Tsyvinski the possibility for the EURO to go to $0 is just 0.009%. This leads us to the conclusion that the risk for BTC is not as low as we first thought.

Some of the other arguments are that Bitcoin is actually a modified Ponzi scheme. One day all Bitcoin fans will have exactly $0 value in their wallets. 

If the price really goes to $0 it will be impossible to trade Bitcoin and buy anything with it. One of the plausible scenarios is that the Governments will ban the asset in order to protect their population from the highly volatile nature of the coin. On the other side, there are many countries in the world and if one country bans Bitcoin it only bans itself to be part of this global system.

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