Find out whether the show’s over for digital assets. Can crypto disappear?
Can crypto disappear? That's the question on everybody's lips after Bitcoin fell to its lowest level in 18 months — losing the psychologically significant level of $20,000. To make matters worse, the total market cap of all cryptocurrencies has plunged by more than $2 trillion since November 2021… with some altcoins down 90%.
A (tongue in cheek) website called bitcoinisdead.org has been dutifully compiling so-called BTC “obituaries” for several years now, where major news outlets declare that the digital asset’s best days are over. But on countless occasions, confident predictions of Bitcoin heading to $0 have been followed by new all-time highs a few years later.
When it comes to the matter of will crypto disappear, answers vary depending on who you ask. Sceptics of digital assets tend to argue it’s only a matter of time before the industry implodes. And as you’d expect, impassioned believers maintain that new heights will be reached when the next bull market comes along.
What can cause crypto to crash? For an example, look no further than the multi-billion-dollar collapse of the Terra blockchain. This provided compelling proof that even the biggest cryptocurrencies can vanish in a matter of days. LUNA, once a top 10 altcoin with a market cap of $40bn, entered into a death spiral in May — with the token’s price falling from highs of $119 to crushing lows of $0.00001675 in just six weeks.
For so-called “Bitcoin maximalists”, those who believe in the value of BTC and nothing else, this was a moment of vindication. They argue most, if not all, altcoins are worthless – and they are inferior to the world’s biggest cryptocurrency in almost every way. Some had been trying to warn investors about LUNA long before its messy demise.
This has led some in the space to stress there’s a clear distinction between Bitcoin and cryptocurrencies – insisting that the two must not be conflated.
Samson Mow is an entrepreneur who recently started a company called JAN3 in his quest to encourage nation-state Bitcoin adoption. And he has played an instrumental role in El Salvador’s ambitious embrace of BTC as legal tender.
He told Currency.com: “Crypto could disappear forever because crypto is just centralised projects creating tokens and coins at will. There are over 20,000 crypto projects now and most are pointless.
“Bitcoin, however, will not go away, because it is actually decentralised and it is still very much in demand as a replacement for legacy money by individuals, corporations, and nation states.” Samson Mow, CEO, JAN3
Mow has a point here, with so-called meme coins popping up all the time. Just hours after Will Smith slapped Chris Rock at the Oscars, a token called Will Smith Inu was born. The token was a flash in the pan – rising and falling in the blink of an eye – and it shows just how easy it can be to launch a digital asset.
Can crypto lose all value?
David Gerard is a crypto critic and author who closely covers the excesses, wrongdoings and scams in this often opaque industry. He told Currency.com: “I think it’s obvious that Bitcoin and crypto will be around for decades.
“All you need is the software, the blockchain data, and two or more enthusiasts.” David Gerard, crypto critic and author
For him, the pressing question is whether crypto will be an interesting financial instrument in the months and years to come.
“The original use case for Bitcoin was money outside government scrutiny,” added Gerard. “And even now, avoiding government scrutiny is crypto’s main use case. This isn’t always wrong – governments can be annoying and incorrect in their behaviour. But that’s not really sustainable as a use case.”
With ever-closer ties being forged between cryptocurrencies and financial institutions, Gerard believes regulation will increase. “When you touch real money, you’re expected to play by the rules of real money. That shouldn’t surprise anyone,” he explained.
Gerard says cryptocurrencies will always have a market price of some sort for as long as they can be owned as property. When it comes to whether these assets will disappear, he added: “If being kicked out of actual finance counts as ‘disappearing’, I think that should be considered possible. I don't think it's likely. I expect only ever-increasing constraint. But it’s not impossible.”
Crypto is here to stay
Alice Liu, head of research at CoinMarketCap, told Currency.com: “Crypto is here to stay. This will be a gloomy, but arguably the most optimistic crypto bear market we will have experienced.”
She argues that the industry has matured substantially since 2018, with funding from venture capital firms increasing by $37bn in the past two years alone. This is three-and-a-half times higher than the previous five years combined.
Liu said: “If we look at institutional adoption, crypto has now been incorporated by large platforms into areas such as capital markets, trade and e-commerce, government and public sectors with demonstrable real-life use cases.
“As this continues to grow, crypto is only here to stay.” Alice Liu, head of research, CoinMarketCap
Amy Castor, an independent reporter covering crypto and NFTs, told Currency.com BTC has gone through several bubbles – but it and many other coins won’t disappear any time soon. Nonetheless, she claimed Tether is the industry’s Achilles heel. Although the stablecoin issuer has long insisted that it has enough capital in reserve to cover all of the USDT in circulation, there’s scepticism in some circles as to whether this is the case.
“If the US Department of Justice comes down on Tether – something we’ve been waiting for since 2017 – Bitcoin will see lows it hasn't seen in a long time. But it won't go away,” said Castor.
Like Gerard, Castor believes regulation is crucial to clamp down on “new grifts” designed to entice retail investors – citing initial coin offerings, decentralised finance (DeFi), non-fungible tokens (NFTs) and play-to-earn games as examples. Of course, enthusiasts would challenge this, and assert DeFi and NFTs will endure.
Can crypto disappear forever?
As we’ve learned in the article above, there seems to be a consensus that cryptocurrencies are here to stay – that said, their total market capitalisation could diminish. And, of course, individual coins crash and burn at any time.
How to know which crypto will disappear?
This is easier said than done. Rug pulls, where a project’s creators abruptly exit and take investor capital with them, are difficult to anticipate.
But performing due diligence can greatly reduce your chances of being sucked into a scam. Keeping on top of news coverage and negative developments concerning specific coins, can also give you a sense of an asset’s direction of travel.
What can cause the crypto market to crash?
The maturing crypto industry has become closely correlated to major stock market indices on Wall Street – meaning Bitcoin falls when the S&P 500 falls.
Right now, fears over the war in Ukraine, coronavirus lockdowns in China hitting global supply chains, soaring inflation in major economies and rising interest rates are prompting investors to pull their cash from riskier assets such as BTC.
Given how crypto is a relatively thin market, a large sell order can create a substantial dent in an asset's price – triggering liquidations and causing everyday traders to dump their coins in a panic.
What causes cryptocurrencies to lose all value?
It’s not so easy to address the question which crypto will disappear next. No two cases are alike. Dogecoin’s runaway success in early 2021 was a sign of froth and excess in the market, driven by glowing tweets from Tesla CEO Elon Musk. But its rapid decline began when the billionaire called in a “hustle” on Saturday Night Live.
Meanwhile, LUNA’s value evaporated after the algorithmic stablecoin called UST lost its peg to the US dollar, effectively triggering a run on the cryptocurrency market.
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