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How Big Is the 2022 Crypto Crash? A Historical Perspective

How Big Is the 2022 Crypto Crash? A Historical Perspective

Ruth Kise 5 min read
This year started with a significant decline in the cryptocurrency market, which did intensify because of the geopolitical situation. Since the fall of 2021, crypto has been passing through the bear market and this trend continues to this day. And over the past one and a half to two months the main cryptocurrency has collapsed in price by almost 60%. Are Crypto Market Crashes Really Bitcoin Crashes? The correlation between cryptocurrencies has always existed to various extent. Altcoins depend upon Bitcoin because of the formation of primary demand for digital currency around it. Almost half of all coin investments are in BTC. Large investment portfolios include Bitcoin as a core asset. All large exchanges hold the bulk of liquidity in Bitcoin, as the largest volumes of transactions occur in trading pairs with BTC. Although the dominance index has shown steady growth in altcoins investment since 2017, Bitcoin still holds 40% of the entire market. The closest competitor, Ethereum , is 2 times behind it. Thus, when Bitcoin collapsed from $48.2 thousand to $28.9 thousand, it dragged down all the altсoins. Ether is down 52% since January 2022 and now costs $1,800, Solana is down 74% to $45.87, Cardano is down over 64% and costs $0.4909. If you're a newbie, then you might feel like it's a complete collapse of cryptocurrency. And seemingly with a good reason, because such a sharp and long drop in prices was a long time ago. However, the market has already faced crashes more than once. So we will look at the most important cases of bitcoin drops: The Largest Bitcoin Drops to Date It should be mentioned that any drop in prices is associated with their growth, and vice versa: a kind of swing that leaves no investor indifferent. 1: The Rollercoaster of 2011 The very first shock caused an unexpected rise of Bitcoin from $1 to $30 in early 2011. However, this wave of growth was followed by a staggering drop in the asset price in June 2011. During the period from June 8 to 11, the price of BTC fell by almost 50%, reaching $14.65. Such a sharp jump is explained by the sudden increase in the hashrate to unprecedented values. Also, mentions in some mainstream media played their role. On June 19, 2011, the Mt.Gox exchange was hacked , bringing down the price of Bitcoin to $0.01. It affected the accounts of 60 thousand users totaling more than $8.7 million. One week later, trade on Mt.Gox recovered, and the fall in prices after the hack became the largest in the history of Bitcoin. 2: The New Heights of 2013 The next shattering experience awaited investors for two whole years. In 2013, the volatility of major cryptocurrencies set new records. BTC set a new historical high of $1,147. Against the background of general euphoria among crypto investors, the coin did not stay above $1000 for long - very soon a bear trend began, during which the BTC fell to $694. The next time the cryptocurrency was able to overcome resistance again at the level of a thousand dollars only in January 2017. 3: The Final Misadventure for Mt. Gox In February 2014, the Mt.Gox site was hacked again, this time 744 thousand bitcoins were stolen. It is an absolute record and the biggest hack in the trade to date. As a result of the hack, Mt.Gox filed for bankruptcy and closed, creating panic in the bitcoin market. From that time on, the first prolonged fall of Bitcoin began, which is commonly known as the "cryptocurrency winter." 4: The Time When Even Your Grandma Learned About Crypto The end of 2017 is remembered for euphoria due to the achievement of a new peak in the price of Bitcoin. True, in the same month, the value of the main digital asset began to fall rapidly - a week after the formation of the historical maximum on the line of $20.000, BTC dropped to $13.000. 5: The Comedown of 2018 The fall continued into 2018 and marked a new crypto winter. In January, the coin fell to $9,800. The lack of centralized regulation left the question of safety open. In the first nine months of 2018, $927 million worth of cryptocurrencies was stolen from platforms of different countries, according to a CipherTrace report. Also at the beginning of the year, phishing mobile applications of larger exchanges were distributed, which stole customer data.  Great interest in cryptocurrency and the ICO market has led to the emergence of many scam projects. It all ended with the biggest social networks - Facebook, Instagram, Google, Twitter, Snapchat, Baidu, Weibo - rolling out a ban on any ICO ad, no doubt a blow across the industry. So on the 14th of November, BTC cost $6,359, and already on November 25, the rate was $3,729. 6: The Great Expectations (vs Reality) Another memorable crypto drop took place in late 2019. The main topic in the community was legal issues, the struggle of the US Securities and Exchange Commission (SEC) with bitcoin-ETF, and hopes for the launch of the institutional bitcoin service Bakkt.  In September, Bakkt finally launched but did not attract much attention among institutional investors, triggering a drop from $10,036 to $6,657 in just a couple of months. To Sum Up High inflation in the US stock market and general global economic instability were naturally reflected in a decrease in risk interest among investors. In addition to the situational panic against the background of the fall of UST, the tightening of the monetary policy of the FRS and the end of the "bull" trend in the technology sector, which includes cryptocurrencies - the main current reasons for the fall of the market. The current market crash is not the largest in history, although due to large capitalization, absolute numbers are really large. The price of Bitcoin has been able to increase by several hundred to 60 thousand dollars, so you should not worry about short-term calendar cancellations.  On the other hand, there are some coins that have less correlation to BTC and it could be a fine new trend. For example, BNB with a well-built all-in-one ecosystem and Launchpad. BNB began to actively master one of the largest markets - the American one. As a result, the position of the currency will only strengthen, which makes it extremely promising for investment.  Clearly, the cryptocurrency will deal with all fluctuations - both minor changes during the day and severe monthly collapses.
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Bitcoin Futures Trading And ETFs: What's All the Fuss?

Bitcoin Futures Trading And ETFs: What's All the Fuss?

June Katz 5 min read
Despite the governments around the globe’s growing efforts to bring crypto markets under control, many aspects of them still somewhat resemble the Wild West — what with the play-to-earn games boom, NFT speculation, and other features that are often poorly understood by the officials. However, at the same time, there are some tendencies bringing “traditional” legitimacy to some aspects of the vast cryptocurrency market. One of the signs that Bitcoin , specifically, is getting more and more mature as a currency and as a market is the recent appearance of the Bitcoin futures ETFs. Going Legit: What Are Bitcoin Futures First, let’s take a quick look at what the futures themselves are. In short, they are contracts that obligate the parties to sell and buy the specified asset at some fixed time in the future (at the contract expiration date) for a fixed price. The underlying assets for the futures contracts may be stocks, commodities, etc; in 2017, Bitcoin joined the ranks of such assets. Bitcoin futures have been trading on several exchanges since then, some of them institutionally regulated, like Chicago Mercantile Exchange (CME), and some unregulated, like Binance. In general, the purpose of a futures contract may be to hedge against volatility, to speculate on the prices, or to reduce uncertainly while planning future investments (as the price paid at the expiration is known in advance). Some futures markets allow cash delivery instead of physical one, meaning that the parties don’t have to exchange an underlying asset at the end of the contract, operating with its cash equivalents instead (and in the case of the Bitcoin futures, this means fiat currency). Just like another popular cryptocurrency derivative product, perpetual swaps, futures trading is usually leveraged. This means that the buyer doesn’t pay the whole price of the contract upfront but just a part of it (the rest is put up by the broker, hence “leverage”). This allows the trader to get more profits, compared to the initial payment, if the trade goes well, although the risks are higher too (bad trade may put him or her into debt towards the broker by the contract’s close). Bitcoin Futures Trading: Pros And Cons Bitcoin futures, specifically, have several features that fit this particular asset very well. First of all, as futures don’t require access to the underlying asset itself, the investor can gain exposure to it without getting into Bitcoin trading which sometimes deters institutional investors (and even retail investors are sometimes hesitant to create wallets and learn the nuances of trading crypto itself). Secondly, the futures market is regulated — which, again, is more attractive to institutional investors. Also, there are mechanisms akin to stop-loss in place, which allow the investor to cut their losses. There are also some negatives to watch for. Leverage makes the trading riskier: as the wins are amplified, so are the losses Futures are “not the real thing”: the traders don’t own Bitcoin, just the contracts to buy and sell Futures contract’s value is fixed (you can’t buy a partial contract), and it can be pretty steep. For example, the CME Bitcoin futures price is 5 bitcoin for one futures contract (although it’s in the process of launching micro Bitcoin futures, with the price of 1/10 bitcoin). We Must Go Deeper: Why ETFs There has been a big push towards the crypto ETFs, and in October 2021 the news came: SEC has approved Bitcoin ETF, which is the first for this market. ETF is an exchange-traded fund tracking the price of an underlying asset. In the case of the futures-based Bitcoin ETFs, the price getting tracked is not the current, or spot, Bitcoin price, but, as the name implies, the price of the Bitcoin futures available at the moment. The purpose of Bitcoin ETF is ostensibly to offer exposure to this asset to the traditional investors with more trust in the stock market than the crypto one, who nonetheless are looking for the best crypto to invest in now (as seemingly everybody does). Bitcoin ETF Trading: Pros And Cons ETFs issue shares, and as such allow for more granular trades than the futures contracts. Bitcoin (or, for that matter, any crypto) ETFs are traded on a stock exchange, eliminating the need to either learn specifics of the futures trading or, in the case of Bitcoin, learn the ins and outs of the cryptocurrency trading . On the other hand, there are issues with ETFs. Just a few examples are: Futures-based ETF can underperform the underlying asset, both because of the management and other fees taken from the investments and because of the imperfections in the tracking mechanism. ETFs are traded during market hours, not 24/7. ETFs gains are also subject to more taxes than futures. Considerations And Consequences: Bitcoin Futures Trading And Bitcoin ETF News Trading Bitcoin futures themselves, while may be profitable for the experienced investor familiar with this instrument, is not easy to get right (and expensive!) for a novice. Moreover, it can prove either too risky (if it’s happening on an unregulated platform) or hard to get into (on the regulated futures exchanges requiring setting up an account). On the other hand, it’s easier to start trading Bitcoin futures ETFs, which can be as simple as buying some shares through a Fidelity account. While not necessarily offering as much to gain as futures (and still risky), they can mitigate some investors’ concerns. Combined with the above-board structure of the ETFs, this facilitated strong investor interest: just a month after its launch, the pioneering ProShares Bitcoin ETF (ticker BITO) has more than $1.3bn in exposure, with others — Valkyrie and VanEck Bitcoin ETFs — trailing not far behind. Still, this is not all that the brokers and investors wanted. In 2021, the battle with SEC for the spot, not futures-based Bitcoin ETF approval seems all but lost — but there’s no way this is the end. By the looks of it, though, for this kind of SEC Bitcoin ETF approval, BTC undoubtedly will have to come under the regulator’s gaze even more. Conclusion: What Does It All Tell Us About the Bitcoin Future While the Holy Grail for the traditional trader interested in crypto exposure — a spot-based Bitcoin ETF — is not yet here, the current situation is a big step toward Bitcoin’s wider adoption and legitimization. It’s undeniable now that both institutional and retail investors are taking note of Bitcoin’s market power, despite the general public’s history of distrust toward the cryptocurrency crowd. This also might be opening the doors to other cryptocurrency ETFs and futures to follow. While this is exciting for many, there’s also the opposite opinion: bringing Bitcoin into the big leagues defeats its purpose as a decentralized currency. It does seem ironic that the asset whose whole history started with the words “Chancellor on brink of second bailout for banks” is moving full steam into Wall Street markets. But of course, it might be that Bitcoin trading will bring changes there — and not the other way around.
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Crypto for Free: Top 3 Bitcoin Faucets

Crypto for Free: Top 3 Bitcoin Faucets

June Katz 4 min read
What is a Bitcoin Faucet? Bitcoin Faucets are websites or apps where you can get a certain portion of BTC for free. In the past, when the main goal was promoting digital cryptocurrency among ordinary people, users could get up to 5 BTC for each claim. Nowadays, instead of Bitcoin, faucets give away Satoshi — its smallest indivisible unit equal to 1/100 millionth of BTC, for completing tasks ranging from playing games to watching ads or entering a captcha. It might not be clear from the get-go why there would be many websites giving crypto entirely for free, as it seems. Nowadays, these faucets collaborate with businesses and stay afloat as long as they make enough profit in ads. Since many people use such faucets and some of them can potentially be scams , find below a list of trustworthy Bitcoin faucets.  Best Bitcoin faucets Freebitcoin This is probably the most well-known Bitcoin faucet and it has more than 42 million users. There’s the traditional way of getting BTC when you get coins every now and then and the website also holds things like games, online casinos, and weekly lotteries. They even advertise winning a Lamborghini on the main page. The website claims that one can win up to the 200-dollar value of BTC playing the games or up to 1 BTC playing HI-LO. It’s important to keep in mind that it’s less likely to win the maximum amount offered and these big numbers are used as a way to attract users. The website says one can deposit coins with an interest rate of 4.08%. The referral program is quite generous since it guarantees the user about 50 percent of what their friends are winning on the platform, and it also shows the current price of BTC. The website has a premium version and its own token. Even though the website is famous, it resembles an online casino by design and has too many distractions.  Cointiply Founded in 2018, this faucet offers you to watch ads and videos, and play games. The website possesses loyalty and referral features, as well as expert support. Compared to the previous one, it has a more pleasant design and doesn’t resemble a gimmick. It has almost 2 million users and is available on Google Play. Given that one can claim 200 Satoshi approximately every hour, one can withdraw 35 thousand Satoshi to a built-in wallet and 100 thousand directly to your Bitcoin wallet. This website is less generous in terms of the referral program since it only offers 25% for claims and 10% for the earnings. There’s a loyalty program where under the condition that the user logs in daily, one can get up to 100% in bonuses. Once the user possesses 35 thousand coins, a 5% interest rate is guaranteed. The website also has a FAQ where one can find answers about the platform, as well as tips on how to use it more effectively.  Firefaucet What stands out for this particular platform is that it is multi-currency. If BTC is not necessarily your coin of choice, you can get Tether, Ethereum , Dogecoin , Litecoin , Dash , Tron , DigiByte , and ZCash on this website. It also has quite a minimalistic design which stands out from other ones where there are luring ads and such. It has a little bit more than 600 thousand users and the coins can be stored on the built-in wallet or your own without any fees. It claims it has the highest rates but one can’t find any exact percentage on the main page. A nice feature is that the website has no pop-up ads. Conclusion Such faucets are suitable for beginners as a good way to acquire some cryptocurrency with little effort and no financial loss. Many of them require your wallet information and have referral programs where you get bonuses for inviting people to the platform. Since possessing BTC, even as little as such websites offer, is a dream for many, we advise you to be careful and use critical thinking when visiting such places. There’s always a chance for the website to turn out to be a scam or use your personal information. If you feel hesitant about a certain website or an action it asks you to perform, do your research and read public reviews on it. Since some faucets use techniques similar to gambling, don’t forget to be responsible for how you spend your time there. It’s worth paying attention to the number of coins for each claim, how much you can withdraw and with which method, and how big the fees are. A good tactic is registering on multiple faucets, comparing them to each other, and multiplying your gains. It’s also important to keep in mind that the terms and conditions of a particular Bitcoin faucet can change over time.
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Top 5 Bitcoin Myths Debunked

Top 5 Bitcoin Myths Debunked

June Katz 4 min read
Despite the fact that Bitcoin has been around for over eleven years and has gained numerous supporters over the course of its existence, there are still multiple misconceptions associated with it, further endorsed even by notorious financial institutions like Golden Sachs. They are based on faulty analysis, irrelevant arguments, and outdatedinformation. The ultimate goal of understanding Bitcoin can be achieved by providing every one of such questionable statements with facts and explanations. Myth #1: Bitcoin’s volatility obstructs it to be a trustworthy financial asset In reality: It actually proves the credibility of its monetary policy People criticize Bitcoin for its fluctuations in price and see this as an obstacle to being stable or a favorable unit for storing and investing. There’s a microeconomic politics trilemma called The Impossible Trinity which explains why it can’t be any other way. Simplified, you can only have two of the three factors in a monetary unit: fixed exchange rate, independent monetary policy, and free capital movement. Any one of these factors would contradict the other two. For Bitcoin, the odd one is the fixed exchange rate. Fiat money follows the principle as well and Bitcoin’s volatility is nothing but the logical outcome based on this trilemma. Moreover, Bitcoin’s volatility declines over time. The more it is adapted, the less the fluctuations in price will be in their amplitude. Bitcoin’s purchasing power, as a result, has also shown growth despite all the volatility. Its price has been increasing by roughly 200 percent every year since 2011 despite the fluctuations within the year itself. Since 2014 it has also shown growth as demonstrated by the lowest price each year. Myth #2: Bitcoin is an isolated form of payment that is used by a small number of people In reality: Bitcoin has full potential to become the payment instrument of the future People question Bitcoin’s capabilities of being a proper investment active that won’t disappear and lose its worth one day. Another argument is that it doesn’t hold any value in it. Contrary to these arguments, Bitcoin possesses positive characteristics which can make it the equivalent of gold but in the digital world. It is transparent, divisible, safe to use, and verifiable. Experts expect continuous growing demand for Bitcoin. Currently, its market capitalization is 2 percent of that of gold.  Myth #3: Continuous forks and copies will eventually lead Bitcoin to lose its value In reality: Bitcoin’s value can’t be duplicated by software alone Bitcoin’s software is free and open-code and technically, anyone could copy it, just like users can make copies of digital files. However, this won’t necessarily increase the number of Bitcoins themselves in circulation and the new networks still comply with the same sets of rules and principles. Instead, it stimulates the market and gives the opportunity to create new projects and coins. Bitcoin still stays deficit and the number of new coins created doesn't equal in value to the original Bitcoins. It was proven that forks still couldn’t influence Bitcoin’s number of active users, hashpower, and liquidity. Myth #4: Bitcoin is mainly used for performing criminal and illegal operations In reality: It is against any form of censorship Everything that people don’t completely understand they generally label as bad or dangerous. This is the case with Bitcoin which is criticized for financing criminal and illegal operations. At its inception, it was accused of hosting a black market platform. In reality, Bitcoin is negative towards any case of censorship and puts this principle among its core values. The platform itself is as helpful to criminals as any asset in the real world, be it the Internet or mobile phones. The percentage of Bitcoin operations connected to illegal activity is actually less than 1 percent, so it is surely not used exclusively to fund crimes. Moreover, most illicit activity still happens with fiat as demonstrated by both absolute and relative terms. Myth #5: Bitcoin is a waste of energy In reality: It uses more resources than gold or banks but for the sake of safer transactions The hefty sums of money accumulated as a result of mining Bitcoin are posed as a guarantee that the transaction was made. Bitcoin’s supporters see this as its fundamental difference of the cryptocurrency from other forms of using energy. They claim that there’s a balance between the calculations made and the safety of the transaction. While Bitcoin spends more in one place, it uses less in other aspects. The estimated dollar cost of Bitcoin mining per GJ spent is 40 times more efficient than traditional banking, and 10 times more efficient than gold mining. It also uses renewable energy and has the intention to solve the problem of regions that have unused power.  Conclusion While Bitcoin is relatively complicated and new, it shouldn’t discourage its critics from doing proper research based on facts and logic rather than indulging in urban legends about it. There should be a constructive debate between its supporters and protestors. So far, Bitcoin has proven to be a good candidate for the role of the digital money of the future, to use power effectively, to have credible monetary policy, to be censorship-resistant, and independent of fork and copies.
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