Has the Bitcoin Bubble Burst?
How Bitcoin will progress is still unknown today. But one thing is certain: it reacts to global events. It was almost impossible for Bitcoin not to react in these days when the world was going through difficult times (Covid 19 pandemic and its economic effects, Russia-Ukraine War, China-Japan tensions, etc.).
As of November 9, 2022, the price of Bitcoin hit a two-year low of less than $16,000. An air of panic dominated the market. The crisis, which started when FTX, which has a large share in cryptocurrency exchanges, ran a budget deficit, was negatively received by investors and they suddenly withdrew their assets from the market. This is a common problem in financial assets. As a country, we experienced a similar situation during the banking crisis in 2001.
No crisis comes out of nothing. There is an absolute reason. The crisis we experienced in 2001 was the accumulation of the previous 10 years. Inflation figures were very high. With political instability, decision-making mechanisms were not working effectively.
Table 1 Inflation Figures by Years
|
Yıllar |
Tüketici |
Toptan |
|
1991 |
71,1 |
63,2 |
|
1992 |
67,9 |
65,7 |
|
1993 |
71,4 |
64,8 |
|
1994 |
125,5 |
146,5 |
|
1995 |
76,0 |
65,6 |
|
1996 |
79,8 |
84,9 |
|
1997 |
99,1 |
91,0 |
|
1998 |
69,7 |
54,3 |
|
1999 |
68,8 |
62,9 |
|
2000 |
39,0 |
32,7 |
|
2001 |
68,5 |
88,6 |
Reference: TÜİK
Turkey was unable to respond quickly to the deterioration in global balances, especially after the oil crisis. Foreign trade deficits were growing. After the January 24, 1980 decisions, with the import substitution approach, the ratio of exports to imports was decreasing year by year. In such an atmosphere, the "safe throwing" incident in February 2001 was the last straw and the crisis erupted. Panic-stricken "depositors" tried to withdraw their money from the banks, creating a liquidity problem.
Today, the situation on the FTX exchange is similar. We now know that Binance, the exchange with the highest market dominance, will buy FTX. This is because FTX's budget deficit has exceeded $8 billion. It is likely to be a temporary crisis. We see that short-term investors are adversely affected. This is where financial literacy becomes important.
How Bitcoin will progress is still unknown today. But one thing is certain: it reacts to global events. It was almost impossible for Bitcoin not to react in these days when the world was going through difficult times (Covid 19 pandemic and its economic effects, Russia-Ukraine War, China-Japan tensions, etc.). Countries have experienced inflation figures they haven't experienced in many years. The supply chain came to a standstill at the height of the pandemic. In such a period of global disorder, it is necessary to think twice or even three times when making short-term investment plans.
I foresee that the disruption will improve after Binance's acquisition is completed. After that, I think it will trend in the short term, but there is one very important thing to know: Bitcoin is still traded as an exchange value, not as a currency. Exchanges are also very open to speculation. Before investing, you should have a high level of knowledge about the subject and act accordingly. This is why most people's dream of getting rich in a short time ends in disappointment. All these should be considered when investing.
