Trump signs order establishing strategic Bitcoin reserve
President Trump signed an order Thursday to create a federal Strategic Bitcoin Reserve, signaling new federal support for cryptocurrency in general and Bitcoin in particular.
Scripps News
If you hold and trade in Bitcoin, Ethereum or any other cryptocurrency, you are probably bracing for the fallout from a possible black swan event, even if you are unsure of exact what it is or what it will trigger.
Here’s what a black swan event actually is, and what impact it could have on your cryptocurrency holdings.
What is a black swan event?
A black swan event in cryptocurrency refers to a rare and unpredictable event that has a deep negative impact on the digital currency market.
Cryptocurrency trackers point to several major occurrences that are considered black swan events:
- Mt. Gox Collapse, 2014: Bitcoin exchange Mt. Gox is hacked, losing 850,000 Bitcoin
- COVID-19 Market Crash of 2020
- Terra Luna Crash: the collapse of LUNA and wiping out billions of dollars in 2022
- FTX Bankruptcy, 2022: One of the largest crypto exchanges went bankrupt, with reports that more than $1 billion in customer funds went missing.
Black swan events often lead to massive price swings, panic selling, and regulatory scrutiny. The current black swan in cryptocurrency appears to be more official scrutiny in the crypto market and large, unchecked gains with some currencies.
Cryptocurrency investors brace for black swan
A black swan event is the cause of a rollback or recession in a financial market.
The term applies to all finance industries, but is more often associated with the crypto environment because of the frequency of black swan events and the volatile nature of that market.
Some cryptocurrency trackers suggest a black swan event could occur soon, while others believe one is already currently underway, forced by regulatory questions and the threat of a correction after outsized gains on Altcoins, Bitcoin and Ethereum.
While some investors may lose money to black swans, others profit by buying cryptocurrency on the dip both during and after the event.
Damon C. Williams is a Philadelphia-based journalist with the Mid-Atlantic Connect Team.