With US politicians selling of their stock and taking huge losses and the fear of America suffering Hyper Inflation are we heading for another 2008 crash and if so what will happen to Bitcoin (BTC) that didn’t even exist in 2008!
The United States experienced a financial crisis in 2008 that was largely attributed to problems in the banking system. The crisis was triggered by a combination of factors, including a housing market bubble, the proliferation of complex and opaque financial instruments, and lax regulatory oversight.
One of the main problems was the housing market bubble, which was fuel’d by a combination of easy credit, low interest rates, and lax lending standards. Banks and other financial institutions made large numbers of loans to borrowers with poor credit histories, often with little or no documentation of their income or assets. These subprime loans were packaged into securities and sold to investors around the world, who believed they were getting high returns for relatively low risk.
However, as the housing market began to cool and home prices declined, many borrowers found themselves unable to make their mortgage payments. This led to a wave of defaults, foreclosures, and ultimately, a sharp decline in the value of mortgage-backed securities. This, in turn, triggered a wider crisis in the financial markets, as banks and other financial institutions struggled to value their holdings and faced a loss of confidence from investors.
The crisis was also exacerbated by the proliferation of complex financial instruments such as collateralised debt obligations (CDOs), which were essentially bundles of subprime mortgages and other assets. These instruments were often highly leveraged, meaning that a small decline in the value of the underlying assets could have a much larger impact on the value of the CDO. This made it difficult for investors and regulators to assess the risks inherent in these instruments.
In addition, there were regulatory failures that allowed the financial system to become too interconnected and too reliant on short-term funding. For example, many banks and other financial institutions relied heavily on overnight funding markets to finance their operations, which made them vulnerable to runs and panics.
Overall, the financial crisis of 2008 was the result of a complex set of factors, including a housing market bubble, the proliferation of complex financial instruments, and regulatory failures. The crisis had a significant impact on the US and global economies, leading to a deep recession and widespread job losses.
With many leading analyst’s predicting Bitcoin reaching $1,000,000 per Coin if another crash was to happen is now the time to invest in Bitcoin or is it just hype? Time will tell.