Cryptocurrency now is on the top of the list if you want to know what’s trending in the world. For more than a century, one of the greatest creators of wealth in the world has been the stock market, but cryptocurrency took just a decade to establish its presence. It is a digital currency that is known because of its sudden and tremendous rise in value.
Crypto enthusiasts believe it is one of the greatest assets one can own. It can give you great returns if you invest wisely and patiently. Crypto is now also used for exchanges in various sectors. More and more people are taking an interest in this virtual currency as days pass by. It has its own merits and demerits, but that has not kept people from delving more into the crypto trade.
No matter how intriguing it may be, the crypto market has a reasonable possibility of imploding. In this article, you’ll get to know about a few such facts that indicate that the crypto bubble might burst in the coming years.
What are the possible causes?
- Utility in the real world has not yet bloomed- The maximum use of virtual currency is limited to cryptocurrency exchange only. The proportion of different sectors and businesses that accept crypto as payments is almost microscopic.
- Blockchain adaptation is not as fast as expected- We know that blockchain has a lot of advantages, but still, as of now, its use is only limited to the world of cryptocurrency. It can be of more excellent utility than the internet, but it has not been implemented as such.
- The decentralized nature of the crypto is not prevalent- As we all know, the exchanges in crypto like bitcoin and Ethereum run on a decentralized ledger. It has a lot of perks, but then data shows that ownership of specific cryptocurrencies is pretty centralized.
- No bar or barrier to entry- If you are good with coding, you can develop a blockchain by yourself and hence virtual money. Within a decade after the introduction of bitcoin, there has been a rapid influx of many other similar digital currencies.
- Bitcoin and other cryptocurrencies are not accepted globally- Bitcoin trade is carried out on various platforms like bitcoin trading software worldwide, but there are several blockages. Various governments are reluctant to allow the introduction of crypto, undermining their centralized financial institutions.
- The crypto market is plagued with leverage- Over-leveraged Investors can also be blamed for the cryptocurrency crash. Customers at some of the most famous crypto exchanges will be able to leverage their account equity by 50 to 125 times. While this level of leverage is standard in forex, where currencies move in fractions of a cent, it’s absurd for crypto, which may swing 3 percent in a matter of seconds.
- Investors constantly overhype new technology- Finally, investors usually overestimate further technology uptake. Even though there are a lot of individuals excited about blockchain, it’s been more than a half-decade, and the euphoria hasn’t translated into actual enterprise use. Every next big-thing technology needs time to mature, and crypto is no exception.
Although bitcoin and other cryptocurrencies have somewhat established a substantial presence in the market worldwide, there remains certain skepticism surrounding the crypto trade. This does not prove the fact that investing in cryptocurrency is a bad idea. There will always remain risks in crypto exchanges, but you can still try and invest with proper knowledge.
Conclusion
Cryptocurrency volatility has also made it vulnerable, leading us to think that the bubble might break anytime. Apart from that, it continues to be an essential asset for investment that has not shown any significant sign of implosion.
