If you hold and
trade in Bitcoin
, Ethereum or any other
cryptocurrency
, you might be preparing for potential consequences from an unexpected black swan event, despite not being certain about precisely what it entails or what it may spark.
This is what constitutes an actual black swan event and how it might affect your cryptocurrency investments.
What defines a black swan occurrence?
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A black swan occurrence in cryptocurrencies pertains to an unforeseeable event with severe adverse effects on the market.
digital currency
market.
Cryptocurrency trackers point to
several major occurrences
those classified as black swan events:
-
Mt. Gox Collapse
In 2014, the bitcoin exchangeMt. Gox was hacked, resulting in the loss of 850,000 bitcoins. - The Stock Market Downturn Due to COVID-19 in 2020
-
Terra Luna Crash
the downfall of LUNA and the erasure of billions of dollars in 2022 -
FTX Bankruptcy
In 2022: Among the biggest
crypto exchanges
declared bankruptcy, amid allegations that over $1 billion of customer money had vanished.
Unforeseen black swan occurrences frequently result in significant fluctuations in prices, widespread sell-offs, and increased regulatory oversight. At present, the black swan event within the realm of cryptocurrencies seems to be heightened official examination of the crypto market along with substantial, unregulated increases in value for certain digital currencies.
Crypto investors prepare for potential unforeseen events.
A black swan occurrence can lead to a reversal or downturn in the financial markets.
This term is relevant across all financial sectors, yet it is particularly linked to the cryptocurrency realm due to the frequent occurrence of unpredictable events and the fluctuating character of that marketplace.
Certain cryptocurrency tracking platforms indicate a
A black swan event might happen soon.
while some think one is already currently happening, driven by
regulatory questions
and the possibility of a downturn following excessive increases in value
Altcoins, Bitcoin and Ethereum
.
Although certain investors might incur losses due to black swan events, others benefit from purchasing cryptocurrencies.
on the dip
both throughout and following the event.
Damon C. Williams is a journalist based in Philadelphia who works with the Mid-Atlantic Connect Team.
The article initially appeared on NorthJersey.com.
Are your cryptocurrencies at risk? Why a rare unexpected event might pose a threat to cryptos once more.
