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Current Market Condition Similar to Deadly Black Swan Event?

thenewscrypto.com 28 January 2022 11:24, UTC
Reading time: ~2 m

  • Market sentiment calls for BTC future movements to be characterized by losses.
  • Black swan events are very damaging to the financial markets.

A black swan occurrence is very rare, but when it does occur, it has enormous ramifications. A former Wall Street trader and lecturer, Nassim Nicholas Taleb, was the first to use the phrase “black swan.”

A “black swan event,” as Taleb coined it, is an occurrence that is hard to foresee yet has disastrous effects, as described in his book from 2007. According to Taleb, a black swan is an event so rare that even the likelihood of its occurrence is unknown. Black swan events are very damaging to the financial markets, resulting in widespread destruction with infamously unexpected effects.

2008 Global Financial Crisis

One of the most well-known examples of a black swan event in finance is the 2008 global financial crisis, triggered by the sudden and devastating collapse of a previously booming housing market. Market sentiment calls for Bitcoin’s future movements to be characterized by losses, not gains, due to concerns about impending U.S. regulation.

On Friday, Bitcoin (BTC) came up against the $37,500 barrier as the consensus grew that a significant drop was imminent. After remarks from the U.S. Federal Reserve, BTC/USD rebounded from a drop to a local low of $35,500, although earlier highs escaped bulls. The market looked to anticipate a new probe of the $30,000 support area as the funding rates continued to go into negative territory.

The legislative upheaval that would follow a discussion about the environmental effect of mining is reminiscent of the problematic road a Congressional Bill took last year, which saw intense resistance over its handling of crypto for tax reasons.

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