Faith in the cryptocurrency market is shaken after TerraUST and LUNA fell straight to $0 collapsing 100% in just 3-days. Top exchanges delisted the crypto and the TerraLabs team is reportedly working on ways to bring it back to life. TerraUST and Luna are already the butts of all jokes on social media while its investors are reeling in pain. Questions now arise is- Can Bitcoin also fall similarly and reach $0? Well, let’s decode the possibilities of that happening.
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Will Bitcoin Ever Crash to $0?
A common phrase always ties the crypto market together states, ‘anything is possible in the world of crypto’. A drastic upward swing could well be around the corner and so is an unexpected extreme crash. The ax of crypto swings both ways and can make or break one’s finances.
Two Yale University economists- Yukun Liu and Aleh Tsyvinski, published a report in 2018 titled ‘Risks and Returns of Cryptocurrency’. The economists examined possible scenarios for Bitcoin crashing to $0 in a day.
The researchers used Bitcoin’s historic returns to calculate its risk-neutral disaster probability. The study did not conclude that Bitcoin will never reach $0. They concluded that there is a small percentage chance for Bitcoin to slip to $0 in a day.
The study claimed that Bitcoin’s chances of plummeting to $0 ranged between 0% to 1.3%. You can dive deep into the research conducted by the two Yale University economists here for in-depth knowledge about their study.
Nonetheless, Tsyvinski stated there’s no need to fear or panic as even the Euro has a 0.009% chance of doing the same.
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Bitcoin Unlikely to Hit $0
The chances of Bitcoin reaching $0 is highly unlikely as 0% to 1.3% is extremely slim. Though several traditional stock market veterans repeatedly predict that Bitcoin will go to $0 as it has no real intrinsic value, BTC is most likely to dominate the future of finances. First and foremost, Bitcoin is backed by consumer confidence and mathematics which might always keep it afloat.
However, only one scenario can bring Bitcoin to near $0 and that can happen only if the governments around the world come together and ban cryptocurrencies altogether. Nonetheless, the majority of the governments might not take this route as they know they might not be re-elected to power ever again.
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At press time, Bitcoin was trading at $30,560 and is up 6.1% in the 24-hours day trade. The leading crypto is down 56.1% from its all-time high of $69,044 which it reached in November last year.