its market cap fell $120bn in May

The most important cryptocurrency closed last month with an unexpected collapse, reaching a level that is well below that of April

Bitcoin (BTC) suffered one of his worst streaks last May, after experiencing a really bass player who made back its price more than 20% compared to April.

For this reason, most of the indices around the main cryptocurrency threw red numbers on the boards. However, it is not only because of its price, but also because of its market value, which suffered a sharp drop in its capitalization.

According to the analyses, the main cryptoactive closed the month with a market capitalization of approximately $605.8 billiona figure that is almost $120 billion below the previous month and around 17% down from the market value of January 1, 2022.

Bitcoin (BTC) glimpsed a 17% drop in its market capitalization

Bitcoin: the causes of the collapse in its capitalization

Bitcoin was listed bullish on May 1, with an impressive $27 billion in trading volume corresponding to a market capitalization of around $732 billion. Since then, this value did not stop going back until it reached the mentioned values.

Anyway, BTC is still the greatest digital asset by market capitalization in June 2022.

Among the main causes of the fall of Bitcoin, is the high liquidation that investors made during the week of May 9 to 13, when the announcement of the rise in US interest rates by the FED and the fall of Terra (LUNA and UST) caused an avalanche in the entire ecosystem.

Other factors that also influenced this liquidity run by users were the economic uncertainty caused by the crisis of the war between Russia and Ukraine and the inflation.

More details of the “black May”

During the last month, the number of Magnitude transactions involving Bitcoin touched a maximum of 29,130 ​​at a price of u$s27.00960 per unit last May 12.

This corresponded to a high volume of transactions close to US$278.470 million.

Since then, BTC opened at $28,936.73 and hit an intraday low of $26,350.49. The trading volume was around $66.99 billion and corresponded to a market capitalization of approximately US$553 million.

Due to the price crash that saw Bitcoin hit its lowest point since 2020, late recovery attempts failed to get the currency to retest the bottom region. May opening day market capitalization.

Historical data of Bitcoin.  Source: CoinMarketCap

Historical data of Bitcoin values ​​during 2022. Source: CoinMarketCap

Can Bitcoin drop to zero?

In this scenario, many investors wonder what if the price of BTC fell to zero? The question was already asked in August 2021 in an article in The Economist.

However, the situation was different when it was published. In that article, in fact, it tells about the consequences that a fall to 0 by BTC would generate, an instance that is still perfectly valid.

In the article, it is explained that this could happen due to a system failure, an attack on a large cryptocurrency exchange or a powerful crackdown by regulators, even in response to interest rate hikes by central banks.

The opinion of the gurus

Mohamed El Erianan Allianz specialist, specifies in that publication that “there are 3 types of investors in cryptocurrencies: the fundamentalists, who believe that bitcoin will replace fiat money; the tacticians, maintain that its price will increase as more people buy, and the speculators, they just want to bet and make money”.

According to the expert, for the fundamentalists a big drop would be a big surprise, but those in the third group would be the first to flee. He in turn suggests that, in order to avoid the general stampede, investors of the “tactical” type would have to be convinced.

How would the miners respond? If an accident destroys the crypto economy, he argues that miners would have much less incentive to continue, which would stop the verification process.

Bitcoin (BTC) retreated sharply since the beginning of 2022

Bitcoin (BTC) retreated sharply since the beginning of 2022

If Bitcoin falls to zero, $2 billion would be lost

Ultimately, if BTC were to drop to zero a significant amount of wealth would be lost, which would include, to a large extent, to institutional investorswhich are increasing and entered the sector relatively recently.

In addition, payment companies such as PayPal, revolution Y Visa, they would lose a very large part of their business. Another company that would be seriously affected by this incident is Nvidiawhose video cards are indispensable for mining.

In this way, if BTC falls to zero, the first wave of consequences would mean the loss of $2 billion at the current exchange rate, according to Business Insider.