So, let's imagine a picture: Bitcoin is a proud balloon, smoothly rising into the sky, and under it are investors with high hopes, like participants in a carnival. Everyone is expecting it to rise to a new level, but no one can be sure that it will not burst. The higher our cryptocurrency "balloon" rises, the greater the tension, and if sellers do not take control of the situation, the bubble risks bursting with a roar. Let's figure out how this can happen and what it will lead to.
How will it start?
It all starts as usual: the BTC rate is growing uncontrollably, investors are anticipating profits, and more and more people are jumping on this train. But then, one after another, overheating signals start appearing. At some point, large holders decide to lock in their profits. They (BLACKROCK🤔) start selling large volumes of bitcoins, which slightly depresses the rate. "So what, a small correction," small investors think. But this small push creates a wave: automatic sales on exchanges (long squeeze) are triggered, and the price rushes down.
What happens next?
When the rate starts to fall sharply, a snowball effect occurs. Frightened investors, especially newcomers, decide to “save what they can” and start selling their assets en masse. Stop orders are triggered, margin positions start to close, and the market is sucked into its fall. In a few days, Bitcoin can drop by several thousand dollars, and the panic only grows. Against this background, many remember the ghosts of the past - like the sharp collapse of 2018 or the recent collapse of FTX, and begin to act out of fear.
What are the consequences?
If Bitcoin does go through this bearish scenario, it could have far-reaching consequences:
Massive sell-off - Cryptocurrency assets are losing value, and not only Bitcoin, but also altcoins are collapsing after them. Many can't withstand the pressure and are forced to sell at low prices to minimize losses.
Loss of Confidence – People who invested with the idea of “digital gold” will feel disappointed. As a result, confidence in the crypto market drops and small investors leave, often deciding not to return.
Prolonged accumulation period - As with previous crashes, the market may go into a prolonged depression where buyers lose interest, trading volumes decline, and the entire market slows down for months or even years.
Positive aspects of the fall
On the other hand, every Bitcoin crash becomes an opportunity for the market to “mature.” Such events clear it of speculators, and in the future, more persistent investors who see its long-term value will return to the cryptocurrency. As we know, cryptocurrencies have “died” and been reborn more than once, so this scenario is not the end, but just a new chapter in its exciting history.