What if Bitcoin's Price Falls to $5,000?

(7/26/22 - Luc Olinga)

A crash in bitcoin's would be good for the crypto industry, which could then rebuild on a sounder footing.

With all due respect to the doomsayers, I am not a Cassandra.

At last check bitcoin prices are slightly above $21,000. But let's imagine a situation that some will consider the worst-case scenario: a price crash that takes bitcoin to $5,000.

Would this be a disaster, some kind of black day for crypto?

This question recently was posed to me and I was surprised because I had never thought that it could fall under $10,000. But after mulling it over I replied that, no, it would not be such a bad thing.

I know that for maximalists, who see the king of cryptocurrencies at $100,000 in the medium term, bitcoin at $5,000 would be a nightmare.

The first consequence would be a slump in the broader cryptocurrency market, which currently is valued at $1 trillion, according to the data firm CoinGecko. Of that figure, 40% is represented by bitcoin.

Currently 19.1 million bitcoins are in circulation, representing a total value of more than $401 billion at current prices of $21,000. If prices crashed to $5,000, bitcoin's valuation would fall to $95.52 billion. About $305 billion would be wiped out.

Many people will lose a lot of money. Painful as that is, many of them will stop looking at bitcoin's price day to day, minute to minute, and plenty will probably lose interest in bitcoin altogether.

And that's good!

The Crypto Industry Equals Cryptocurrencies?

One of the biggest problems in the crypto industry today is that the general public boils down the entire industry to digital currencies.

And generally, when people are talking about digital currencies, they are talking about price. And in turn, when they talk about price, they are talking about speculation.

Last year a lot of people got interested in cryptocurrency because they heard that prices were skyrocketing and that they could get rich quick. (Big mistake.)

But if bitcoin truly slumps and people stop thinking about immediate riches and retirement, the intense focus on cryptocurrencies will evaporate. The industry could then start from scratch and change the narrative to show that it is much more than digital currencies.