Bitcoin cryptocurrency has tremendous potential to cause a severe financial crisis. What makes it even worse is Bitcoin's rapidly swellin gglobal influence and adoption. We can't forget so quickly what lead to the 2008 economic recession. Also, we can't ignore that BTC technology was for neutralizing its effects. Other exchanges like https://stockhax.com/ also allow people to use credit cards.

Some argue that Bitcoin is gradually becoming a catalyst for the problem the creator wanted it to solve. Financial market experts warn that Bitcoin's economic meltdown is one of the most dangerous. They add that if it happened, it'd be the greatest in the cryptocurrency industry. 

Taming Bitcoin's potential systemic failure is becoming increasingly complex every single day. That's because thousands of investors worldwide keep pumping millions of dollars into the market. However, this risk seems partial because some investors understand it.

Most early BTC investors have participated in the market long enough to master all its ups and downs. They also know all the DOs and DON'Ts. And importantly, such people are enthusiastic about cryptocurrency, not the urge to make more cash. As a result, this group of players isn't afraid of any market abnormalities and would stay intact in case of bad news.

Unfortunately, a section of the cryptocurrency market comprises only newbie investors. They don't believe in any possible financial system breakdowns. Hype is the only thing concerning them. As a result, newbies quickly avoid anyone talking negatively about BTC. They joined the sector only to make money.

What Does This Mean?

Well, in the event of any uncertainty or emergency, newbies won't hesitate to withdraw their funds. It'll likely be a mass exodus, which can significantly destroy most global financial systems. A Bitcoin's systematic risk is inevitable mainly because the cryptocurrency market consists of many newbie investors. Therefore, those who understand the tricks are too few to counteract a severe crisis.

Why Bitcoin is a Potential Systemic Risk

One of Bitcoin's primary winning aspects is how the network operates in a decentralized manner. The peer-to-peer configuration makes the Bitcoin platform more efficient than the traditional central banks. However, that convenience is also one of the main factors driving BTC cryptocurrency to threaten systematic stability.

Following the price rises of 2017 and late 2021, first-time cryptocurrency investors scramble to purchase BTC at a rate we haven't seen in history. And this has seen Bitcoin's market cap thrusting beyond the 200 billion dollar mark. But that's not enough. Many people borrow from the crypto sector, making the situation even more catastrophic. 

Unlike other markets, crypto doesn't offer direct cash loans. Instead, some trading platforms provide their users with investment incentives. Utilizing such funding options has seen several youths making millions from Bitcoin and other cryptocurrencies investments.

Sadly, only a few people are ready for any unprecedented emergency. Most traders will rush to convert their coins into USD, and such a move could make the prices sink drastically. In addition, the current total Bitcoin investment funds are way less than the market share. As a result, a mass exodus would immediately cause a liquidity crunch. And this implies that most of the active intermediaries aren't able to process all withdrawals at once should the need arise conveniently.

Final Thoughts

A systemic failure resulting from Bitcoin and its associated digital assets is probable. The independent operations and top-notch efficiency have made BTC more welcoming to thousands of inexperienced and money-hungry investors. Also, indirect credits such as trading incentives and the use of credit cards have constantly attracted additional investors. 

Therefore, Bitcoin's market cap has grown and exceeded the available investors' funds. And this has created a financial deficit, rendering the Intermediary institutions unable to process withdrawals in case there's a massive exit of investors. The inability of the users to convert their Bitcoins into fiat money can be immensely devastating because the market will undergo a severe liquidity crunch.

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