<p>If there are no more buyers at price X, then a seller has to lower his price by Y. If there are still no buyers, she will have to lower it more. If there a lot more sellers than there are buyers the price can drop very quickly, just as right now there are a lot more buyers than there are sellers and the price is rising very quickly.</p>

CC BY-SA 3.0
2013-04-10T04:53:23.043Z
2013-04-10T04:53:23.043Z
Redbeard
<p>A crash is a bit like an avalanche.</p>

<p>In an avalanche, snow falls and hits other snow; then that snow starts falling too.</p>

<p>People who invest under the <a href="http://en.wikipedia.org/wiki/Greater_fool_theory" rel="nofollow">greater fool theory</a> will sell as soon as the price goes down. Obviously, when they sell, the price goes down more. </p>

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2013-04-10T05:24:52.750Z
2013-04-10T05:24:52.750Z
Nick ODell
<p>There many possibilities, all of which would lower the demand for BTC and, by extension, its value when compared to worldwide currencies. Off the top of my head I can think of:</p>

<ul>
<li>A large swath of BTC being converted to government-backed monies (e.g., USD). This could be as simple as people "cashing in" on prior investments or as compounded as a run on BTC.</li>
<li>Negative press/hype generates speculative fears</li>
<li>Technological breakdowns (e.g., an exchange is hacked)</li>
<li>Mining stops (even if the current state of the protocol does not change, this is not likely for many years.)</li>
</ul>

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2013-04-10T05:46:42.453Z
2013-04-10T05:46:42.453Z
fbrereto
<p>The value of bitcoins has been fluctuating like crazy over the last week, experiencing exponential growth in the BTC to USD valuation. There is no way that that can be maintained longterm. What would make it crash?</p>

<economic-theory><money>
How would bitcoins "crash"?
Throsby
# How would bitcoins "crash"?

(Asked by: username_0 on 2013-04-10)

The value of bitcoins has been fluctuating like crazy over the last week, experiencing exponential growth in the BTC to USD valuation. There is no way that that can be maintained longterm. What would make it crash?

**Tags:** economic-theory, money


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## 3 answers

### Answer by username_1 on 2013-04-10. Score: 1

If there are no more buyers at price X, then a seller has to lower his price by Y. If there are still no buyers, she will have to lower it more. If there a lot more sellers than there are buyers the price can drop very quickly, just as right now there are a lot more buyers than there are sellers and the price is rising very quickly.


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### Answer by username_2 on 2013-04-10. Score: 1

A crash is a bit like an avalanche.

In an avalanche, snow falls and hits other snow; then that snow starts falling too.

People who invest under the [greater fool theory](http://en.wikipedia.org/wiki/Greater_fool_theory) will sell as soon as the price goes down. Obviously, when they sell, the price goes down more.


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### Answer by username_3 on 2013-04-10. Score: 1

There many possibilities, all of which would lower the demand for BTC and, by extension, its value when compared to worldwide currencies. Off the top of my head I can think of:

* A large swath of BTC being converted to government-backed monies (e.g., USD). This could be as simple as people "cashing in" on prior investments or as compounded as a run on BTC.
* Negative press/hype generates speculative fears
* Technological breakdowns (e.g., an exchange is hacked)
* Mining stops (even if the current state of the protocol does not change, this is not likely for many years.)


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