Bitcoin after the crash

Value, viability and the consequences of a zero-price outcome

Bitcoin has endured many violent drawdowns in its history, and yet each decline tends to reignite the same set of arguments: that the price is driven purely by speculation; that it offers no “intrinsic value”; that it can therefore collapse to zero; and that, if it did, the consequences would be self-contained because national currencies do not depend on it. This year’s fall has once again brought those themes to the fore, amplified by the speed with which sentiment can shift in markets that are both globally traded and reflexively narrative-driven.

This article sets out an analytical framework for thinking about Bitcoin’s future in the wake of a sharp decline. It does not attempt to forecast a precise price path. Instead, it examines the drivers that typically govern Bitcoin’s behaviour, the conditions under which further weakness becomes more likely, the plausible routes to recovery or stabilisation, and the realistic consequences if Bitcoin were to fall to (or near) zero. It also addresses the claim that Bitcoin has no intrinsic value, because how one answers that question materially affects how one interprets both upside and downside scenarios.

The key conclusion is that Bitcoin’s future is best understood not as a binary outcome (either global monetary revolution or inevitable collapse), but as a range of scenarios determined by a mixture of macroeconomic conditions, market structure, regulatory posture, technological resilience and social coordination. A zero-price outcome cannot be ruled out in a strict logical sense, but it is not the modal expectation embedded in the way the market, institutions and infrastructure currently treat the asset. The more practical risk is not a clean, instantaneous “to zero” event; it is a prolonged period of declining relevance, shrinking liquidity and repeated confidence shocks which, over time, could drive the price dramatically lower than many participants consider plausible today.

1) The present context: a large, liquid asset with fragile sentiment

Bitcoin is no longer a niche curiosity traded on a handful of early exchanges. It is widely quoted, widely traded and deeply embedded in a broader crypto economy that includes exchanges, custodians, lenders, brokers, miners, market-makers, analytics providers and an increasingly sophisticated derivatives market. The scale matters because it changes the nature of both upside and downside. The more an asset is financialised, the more it can behave like a “macro” instrument: it is influenced by global liquidity, risk appetite, portfolio positioning and leverage dynamics, rather than solely by internal developments in its own ecosystem.

At the same time, Bitcoin remains unusually sensitive to confidence and narrative. That sensitivity is not merely psychological; it is structural. Bitcoin does not pay coupons or dividends. It does not generate operating cashflows. The primary reasons to own it are: (i) the belief that it will appreciate; (ii) the belief that it provides a form of monetary utility (for example, a censorship-resistant settlement asset or a store of value); (iii) the belief that it diversifies a portfolio; and (iv) in a smaller set of cases, the practical need to transfer value across borders or outside traditional banking rails. These motivations can overlap, but they all depend to some degree on expectations about future adoption, future liquidity and future legitimacy. When those expectations are shaken, there is no cashflow “floor” that compels buyers to step in.

This does not mean Bitcoin is destined to fail. It means that its price is, by design, heavily expectation-driven. That is why the same market can at one moment treat Bitcoin as an emerging alternative monetary asset and at another moment treat it as a high-beta speculative instrument. It is also why a single year’s performance can look catastrophic while a multi-year chart can still show survival and resilience. The analytical task is to understand which underlying forces are dominant now, and which would need to change for Bitcoin’s trajectory to shift.

2) The “intrinsic value” argument: a definitional trap, not a decisive verdict

The assertion that Bitcoin has “no intrinsic value” is a common refrain, and it contains a kernel of truth depending on what one means by intrinsic. If intrinsic value is defined narrowly as the present value of future cashflows, then Bitcoin does not fit the model. It is not a business. It does not sell a product that produces revenue distributable to token-holders. In that sense, there is no conventional fundamental valuation method analogous to discounted cashflow analysis for equities or yield-based valuation for bonds.

However, the jump from “no cashflows” to “no value” is not logically required. Many things that are valued in markets do not produce cashflows. Gold is the obvious comparator. Some of gold’s demand is industrial, but much of its value is monetary and social: it is held because it has historically been held, because it is scarce, because it is durable, and because the market for it is deep. Collectibles, fine art and certain commodities can exhibit similar features. Even fiat currency in a wallet does not produce cashflows; it is useful because it is accepted and stable relative to day-to-day pricing.

Bitcoin’s claim, at its strongest, is that it combines scarcity with transferability and a global settlement network that is not controlled by any single sovereign. Whether one agrees that this is valuable depends on one’s assessment of the need for such a system and the durability of the properties Bitcoin advertises: credible scarcity, resistance to censorship, predictable issuance, and security through decentralised consensus. Critics counter that (i) scarcity alone does not create value; (ii) there are many substitutes in the crypto ecosystem; (iii) regulation can curtail on-ramps and off-ramps; (iv) volatility makes it a poor unit of account; and (v) energy consumption or other externalities could provoke sustained political opposition.

The crucial point is that “intrinsic value” is not a scientific metric; it is a framework. For Bitcoin, the most honest conclusion is that value is primarily a function of network effects and shared belief about future usefulness. That can be durable (as it has been so far) or it can be fragile (as many speculative manias have been). The crash narrative tends to treat belief as purely irrational; the bull narrative tends to treat it as inevitable adoption. An analytical approach recognises that belief can be rational in the presence of network effects, but also that network effects can unravel.

3) Why Bitcoin crashes: the four recurring drivers

When Bitcoin falls sharply, the post-mortem often focuses on the “headline” catalyst: a regulatory statement, an exchange failure, a macroeconomic data print, a scandal. In reality, Bitcoin’s biggest declines typically require multiple drivers to align. Four stand out.

(a) Liquidity and macro conditions
Bitcoin has increasingly traded as a liquidity-sensitive risk asset. When global financial conditions tighten—whether through higher policy rates, reduced expectations of rate cuts, or a rise in real yields—assets with long-duration narratives and no cashflows often reprice. Bitcoin can behave like the purest expression of that dynamic. When money is plentiful, speculative capital flows more freely into high-volatility assets. When money is scarcer, investors de-risk, leverage is reduced, and marginal buyers disappear.

This does not mean Bitcoin is “just another tech stock”, but it does mean it is not insulated from the broader monetary environment. In a year where the market is repeatedly forced to reassess the path of interest rates or the durability of economic growth, Bitcoin can find itself whipsawed. If the crash has coincided with a shift towards tighter conditions or a reduction in expected easing, that should be treated as a primary explanatory factor.

(b) Market structure and leverage
Bitcoin’s ecosystem contains spot markets, futures, perpetual swaps and options. Leverage, explicit or embedded, can amplify both rises and falls. When prices are rising, leverage allows more speculative buying, creating positive feedback. When prices fall, margin calls and liquidations can force selling into weakness, creating negative feedback. This is how a market can move far further and faster than a slow-moving “fundamental” story would suggest.

A leverage-driven decline can feel like the market is “breaking”, because price action becomes self-referential. The key analytical question is not whether leverage exists—one can assume it does—but whether it is being reduced (deleveraging) or expanded (re-risking). A crash often signifies forced deleveraging, and the after-effects can linger as risk managers tighten limits and counterparties become more cautious.

(c) Flow dynamics and institutional participation
As Bitcoin becomes more integrated into mainstream finance, “flows” matter more. Large inflows can support price. Large outflows can depress it, particularly if they occur when liquidity is thin. This is one reason why modern Bitcoin commentary pays attention to institutional participation and the channels through which institutions access the asset. The broader point is that the identity of the marginal buyer has changed over time. If a meaningful share of demand comes from institutions that rebalance, manage risk and respond to macro signals, Bitcoin’s behaviour becomes more cyclically sensitive.

In a crash year, a drop can be exacerbated if large holders reduce exposure, if products experience net outflows, or if market-makers widen spreads due to volatility. This does not require a philosophical rejection of Bitcoin; it can be a simple consequence of risk limits.

(d) Confidence shocks inside crypto
Unlike traditional asset classes, Bitcoin is part of an ecosystem where infrastructure failures, frauds and operational collapses have historically been more common. Exchange failures, lending platform insolvencies and high-profile hacks can cause abrupt, discontinuous repricing. Even if Bitcoin’s protocol remains intact, the surrounding infrastructure can undermine confidence in access, custody and settlement. Retail participants often do not distinguish between the protocol and the platforms; when a major platform fails, they perceive “crypto” as broken.

This matters because Bitcoin’s value proposition includes trust minimisation; yet many participants interact through trusted intermediaries. The tension between the ideology (trustless) and the practice (trusted platforms) is a structural vulnerability. When that vulnerability is exposed, the impact can spread beyond the immediate failure.

4) What does “the future” mean for Bitcoin? Scenarios, not certainties

To ask about the future of Bitcoin is to ask about which of several plausible regimes will dominate. An analytical approach is to define scenarios that correspond to real-world constraints and then assess what must be true for each to occur.

Scenario 1: Persistent asset with continuing volatility (the “survival” regime)
In this scenario, Bitcoin persists as a large, liquid asset class. It remains volatile, experiences cyclical drawdowns, but continues to attract enough demand to maintain substantial value. The drivers include ongoing speculative interest, some portfolio allocation as a non-sovereign store-of-value narrative, and continued development of infrastructure (custody, trading, settlement) that makes it easier to hold. In this regime, crashes happen, but they are treated as part of the asset’s nature rather than as existential threats.

The survival regime does not require Bitcoin to become a dominant world currency. It requires only that it remain “good enough” at its core functions—secure settlement and credible scarcity—and that there remains a critical mass of participants willing to treat it as a legitimate asset. This critical mass can include institutions, but it does not depend on universal institutional endorsement.

Scenario 2: Financialised integration and portfolio normalisation (the “macro asset” regime)
Here, Bitcoin becomes increasingly integrated into conventional portfolio management. It behaves more like a macro instrument: sensitive to interest rates, liquidity, risk appetite and correlations. Volatility may decline over time as markets deepen, but correlations may rise, reducing the diversification benefit that some investors seek. In this regime, Bitcoin can experience large drawdowns during risk-off episodes but can also rally strongly when conditions loosen.

The consequence is that Bitcoin’s fate becomes more intertwined with conventional market cycles. That can be positive (more liquidity, more access, more legitimacy) or negative (more forced selling, more correlation, more dependence on the marginal institutional buyer).

Scenario 3: Structural decline and marginalisation (the “slow fade” regime)
In a structural decline, Bitcoin does not necessarily collapse overnight. Instead, it gradually loses relevance. Trading volumes thin, market depth declines, volatility remains high but rallies are weaker, and fewer new participants enter. Regulatory constraints may not ban Bitcoin outright but can raise friction and reduce mainstream adoption. Competing technologies may absorb attention and capital. The asset becomes, in effect, a legacy speculative instrument with a shrinking community.

The slow fade is plausible because network effects can reverse. A network is valuable because others use it; if usage declines, value declines, further discouraging participation. This does not produce a dramatic headline moment, but it can, over time, be devastating to price.

Scenario 4: Catastrophic failure leading to near-zero (the “collapse” regime)
This is the scenario that attracts the most attention in “could it go to zero?” debates. For Bitcoin to go to or near zero, something close to an existential break would likely be required. That could be a credible security failure, a severe loss of usability due to sustained censorship or regulatory suppression, or a collapse of belief so complete that liquidity disappears. This regime is low-probability but high-impact.

An important nuance: “to zero” is not the only relevant tail risk. A fall of 80–95% from already depressed levels can be economically equivalent for many investors and businesses, even if the price does not literally print zero. The collapse regime can therefore be framed as “near-zero” rather than a mathematical zero.

5) Is it likely to keep falling? A disciplined way to assess the balance of risks

The question of whether Bitcoin is “likely” to keep falling cannot be answered with certainty, but it can be approached probabilistically. The relevant variables can be grouped into three categories: (i) macro and liquidity; (ii) market positioning and flow; and (iii) crypto-specific confidence.

Macro and liquidity
If the environment is one where financial conditions remain tight, risk appetite is weak, and markets repeatedly reprice the path of monetary policy towards “higher for longer”, the balance of risks tilts towards further downside for high-volatility assets. Bitcoin is not unique in that respect. Under such conditions, rallies can occur, but they are vulnerable to reversal because marginal buyers are cautious.

Conversely, if markets shift towards expecting easier financial conditions—whether through policy easing, improved inflation dynamics, or renewed appetite for risk—Bitcoin can stabilise and recover, sometimes rapidly. This creates a trap for simplistic narratives. The same people who declare Bitcoin “dead” after a crash may be forced to revise their view in a liquidity-driven rebound, even if nothing about Bitcoin’s long-term utility has changed.

Market positioning and flow
In the aftermath of a crash, the key question is whether selling pressure is still dominant. If a significant part of the decline was driven by forced deleveraging, there can be a point at which forced sellers are exhausted. This can create conditions for a rebound. But if the decline is driven by sustained net outflows and a genuine reduction in demand—especially from large holders—then the price can grind lower over time. Thin liquidity can exacerbate this process.

A notable feature of modern Bitcoin markets is that many participants watch flow indicators and sentiment gauges. While these are not “fundamentals”, they do matter because Bitcoin’s price is set at the margin by buyers and sellers, and because belief and momentum play a large role in participation.

Crypto-specific confidence
If the crash is linked to crypto-specific confidence shocks—platform failures, scandals, legal enforcement actions—then recovery can be slower. Confidence is hard to rebuild, particularly among retail participants who may have suffered losses. Institutional participants can return if risk-reward becomes compelling and infrastructure improves, but they will typically demand stronger controls, better custody, and clearer compliance.

An analytical way to summarise the above is: Bitcoin is more likely to keep falling if (i) macro conditions remain unfavourable; (ii) net flows remain negative; and (iii) confidence remains impaired. It is more likely to stabilise or recover if at least one of those conditions flips in a meaningful way.

6) What would it take for Bitcoin to go to zero? Four mechanisms

To understand the consequences of a zero outcome, one must first understand what could plausibly cause it. The most commonly discussed mechanisms are:

(a) Demand collapse and network effect reversal
Bitcoin’s value is closely tied to the belief that it will remain widely held and tradable. If that belief collapses, and if new demand dries up while existing holders sell, the price can fall dramatically. The critical element is liquidity: in a true demand collapse, even small sell orders can move the price sharply. The network effect becomes a negative spiral: lower price reduces interest; lower interest reduces liquidity; lower liquidity increases volatility; increased volatility further reduces interest. This mechanism does not require a technological failure; it requires a social and financial unravelling.

(b) Usability suppression through regulation and access constraints
Bitcoin can be owned and transacted without permission at the protocol level, but most participation depends on exchanges, custodians, payment rails and regulated intermediaries. If the ability to convert between Bitcoin and national currencies is heavily constrained, demand could fall. It is difficult for major jurisdictions to coordinate perfectly, but even partial suppression can raise friction significantly. The key point is that regulation does not need to “ban Bitcoin” outright to harm it; it can make access costly, legally risky or operationally cumbersome.

However, one should also recognise that regulation can sometimes have the opposite effect by clarifying rules and enabling institutional participation. The impact depends on the direction and severity of policy.

(c) A credible security failure
Bitcoin’s core proposition depends on the integrity of its settlement: that transactions cannot be reversed arbitrarily, that supply cannot be inflated, and that the network remains resistant to attack. A credible break—whether through a protocol bug, a sustained attack that undermines finality, or a failure of cryptographic assumptions—would be existential. In such a scenario, confidence could evaporate rapidly.

The likelihood of such an event is debated. Bitcoin’s long operational history is a point in its favour. Yet no complex system is immune to risk, and security is a moving target.

(d) Substitution and displacement
Bitcoin could be displaced if a substitute offers superior features and absorbs the network effect. Displacement alone may not drive Bitcoin to zero; legacy assets can retain value. But if substitution coincides with a collapse of belief in Bitcoin’s uniqueness, the combined effect could be severe. The more the market believes Bitcoin’s primary value is its first-mover network effect, the more sensitive it is to the possibility of that network effect being overtaken.

7) Consequences if Bitcoin fell to zero: not a currency crisis, but not irrelevant either

The claim that “no national currency would be affected” is broadly correct in the narrow sense that Bitcoin is not the base layer of any major national monetary system. Sterling, the dollar and the euro do not rely on Bitcoin to clear payments or to back deposits. A Bitcoin collapse would not mechanically force a devaluation of fiat currencies.

Nevertheless, a zero outcome would have consequences across several dimensions.

(a) Wealth destruction and economic spillovers
A collapse to zero would wipe out wealth held directly in Bitcoin and indirectly through funds, trusts, corporate treasuries and structured products. The distribution of losses would matter. If losses were concentrated among a relatively small number of high-risk investors, the macro effect could be limited. If exposure were widespread, the shock to household balance sheets could reduce consumption and risk-taking.

Additionally, many businesses derive revenue from Bitcoin-related activity: trading fees, custody fees, brokerage spreads, lending, mining operations, payment processing, software and services. A collapse would cause business failures, job losses and capital destruction in those sectors. The crypto venture ecosystem would shrink sharply.

(b) Financial system exposure: likely contained, but with pockets of stress
Traditional banks’ direct exposure to Bitcoin has generally been more limited than that of crypto-native firms, but the degree of integration has been increasing. A zero outcome could generate credit losses where banks have lent against crypto collateral, provided services to crypto firms, or facilitated market activity through prime brokerage-like functions. The likely pattern would be contained stress rather than a systemic banking crisis—unless exposure had quietly become large and concentrated.

One should also consider non-bank financial institutions: hedge funds, family offices, proprietary trading firms, and market-makers. Losses among leveraged players can transmit through counterparty networks, causing forced selling in other markets. Even if the broader system remains stable, the immediate market impact could be greater than many assume.

(c) Legal, regulatory and political aftermath
A collapse would trigger intense political scrutiny. Policymakers would face pressure to explain why retail access was permitted, whether marketing was misleading, and whether consumer protections were adequate. Litigation would likely surge, targeting intermediaries, promoters and potentially corporate directors where fiduciary duties were alleged to be breached.

Regulatory responses could take two forms. One is punitive and restrictive, reducing the scope for future crypto innovation. The other is “containment”: tighter rules designed to protect consumers and ring-fence the financial system while allowing some forms of tokenisation or blockchain technology to proceed. Which response dominates would depend on the politics of the moment and on whether the collapse was associated with fraud, negligence or external shocks.

(d) Technology and security implications beyond Bitcoin
If Bitcoin fell to zero due to a cryptographic or protocol failure, the consequences could extend beyond Bitcoin itself. Many systems, not just cryptocurrencies, rely on cryptographic assumptions. A breakthrough that undermined widely used primitives could have broad cybersecurity implications. Even if the failure were Bitcoin-specific, it would still harm confidence in decentralised systems generally, at least temporarily.

If, on the other hand, the collapse were driven by demand and regulatory suppression rather than a security break, the technological implications would be narrower, though it would still dampen investment in adjacent technologies.

(e) Social and institutional trust
A dramatic collapse can also have cultural effects. It can polarise public opinion, harden scepticism towards innovation, and reduce trust in financial commentary and influencers. For some, it would confirm the view that the entire space is a speculative bubble. For others, it might reinforce anti-establishment narratives about the financial system and regulation. The net result could be a more fragmented debate.

8) The more realistic tail risk: not zero, but “functionally broken” for many participants

The public imagination often fixates on the number “zero” because it is psychologically neat. In practice, the more likely adverse path is that Bitcoin becomes functionally broken for a large share of participants even if it still trades at some residual price. This could happen if:

• liquidity becomes thin and spreads widen, making entry and exit costly;
• access is restricted or compliance becomes burdensome;
• custody becomes concentrated, raising systemic operational risks;
• volatility remains extreme, discouraging broader use;
• the ecosystem’s reputational damage deters new participants.

In such a world, Bitcoin could still exist, but its role would shrink. It might persist as a curiosity, a niche settlement tool for a small set of users, or a legacy asset held by a dedicated minority. The difference between that outcome and “zero” may matter less than the difference between that outcome and the survival regime.

9) What could support Bitcoin’s future despite the crash?

An analytical article must also account for why Bitcoin has survived previous downturns and what could plausibly underpin it going forward. Several factors are typically cited.

Durability of the core protocol
Bitcoin’s protocol has operated for many years with a strong security track record relative to its age and the incentives to attack it. Its simplicity compared with more complex programmable systems can be a strength: fewer moving parts can mean fewer attack surfaces. The longer it operates without catastrophic failure, the more its security reputation becomes part of its value proposition.

Credible scarcity and monetary narrative
Bitcoin’s fixed issuance schedule remains central. For holders who see Bitcoin as a non-sovereign store of value, the appeal is precisely that supply cannot be expanded in response to political pressures. This narrative is not universally convincing, but it is coherent, and it can reassert itself when confidence in fiscal or monetary stewardship weakens.

Institutional-grade infrastructure
As custody, compliance and market structure improve, a broader set of investors can participate. This can deepen liquidity and reduce some forms of operational risk. The trade-off is that financialisation can increase macro correlation and create new channels for forced selling. Even so, improved infrastructure can make it less likely that Bitcoin disappears entirely, because more participants have invested in the ecosystem and have incentives to maintain it.

Global, borderless demand
Bitcoin’s market is global. Demand can come from different regions for different reasons: speculation, hedging against local currency instability, capital mobility, or ideological preference. This geographic diversity can provide resilience. A severe clampdown in one jurisdiction can hurt price, but global demand can partially offset it, depending on the scale of suppression and the availability of on-ramps.

10) How to think about “likely” outcomes: a disciplined checklist

For readers trying to assess whether Bitcoin is headed for recovery, further decline, or something worse, a simple checklist is more valuable than a firm prediction.

1. Macro regime: Is liquidity tightening or loosening? Are real rates rising or falling? Is risk appetite improving or deteriorating?
2. Market structure: Is leverage expanding again, or still unwinding? Are liquidations frequent? Are volatility and funding conditions stable?
3. Flows: Are there sustained net inflows or outflows through major access channels? Are large holders accumulating or distributing?
4. Confidence: Are there ongoing platform failures, enforcement actions, or scandals? Or is the ecosystem stabilising?
5. Regulation: Is policy trending towards clearer frameworks or towards suppression and restriction?
6. Technology: Are there credible security concerns emerging, or is the protocol’s reputation intact?
7. Narrative: What is the dominant story that new participants hear? Is it “opportunity” or “warning”? Narrative is not a fundamental, but it affects participation, which affects liquidity, which affects price.

When most of these indicators lean negative, further declines are more likely. When they begin to turn, rebounds can happen, sometimes sharply. The hardest part is that Bitcoin can rally in the midst of a structurally negative environment, and it can fall during a superficially positive one. That is why risk management matters more than conviction for most participants.

11) Addressing the core claim: “if it falls to zero, no national currency would be affected”

It is fair to say that the pound would not collapse because Bitcoin collapsed. National currencies are supported by taxation, legal tender laws, central bank policy, and the productive capacity of the economy. Bitcoin is not embedded in that structure.

Yet, a Bitcoin collapse could still have second-order effects on national economies. Consider:

• Tax receipts and enforcement costs: losses reduce capital gains taxes; investigations and legal processes cost money.
• Consumer sentiment: widespread losses can affect confidence, particularly among younger cohorts.
• Business failures: companies exposed to crypto can fail, causing job losses.
• Political pressure: policymakers may face pressure to restrict other innovations in finance, potentially slowing productive experimentation.

These are not existential threats to currency sovereignty, but they are not trivial. The magnitude depends on the extent of adoption and the leverage embedded in the system at the time of collapse.

12) Conclusion: the future is a contest between resilience and relevance

Bitcoin’s future is not predetermined by the fact that it lacks conventional cashflows, nor guaranteed by the fact that it has survived previous crashes. The relevant question is whether Bitcoin can remain relevant—economically, technologically and socially—in a world where financial conditions, regulation and competition evolve.

In the near term, the probability of further declines depends heavily on macro conditions, market positioning and confidence in the surrounding ecosystem. In the medium term, Bitcoin’s trajectory depends on whether it continues to attract marginal buyers who believe in its usefulness and scarcity narrative, and whether infrastructure and regulation evolve in a way that allows participation without recurring trust shocks. In the long term, the existential risks—security failure, severe suppression of access, or a decisive network effect reversal—are the paths that could drive Bitcoin towards a near-zero outcome.

If Bitcoin were to fall to zero, it would not directly collapse national currencies. But it would destroy wealth, damage businesses, invite political backlash, and shape the regulatory environment for years. The more likely severe outcome, however, is not a clean “to zero” event but a drawn-out decline in relevance that makes the asset progressively less liquid, less investable and less central to financial innovation.

For investors, policymakers and observers, the right stance is neither complacent faith nor dismissive certainty. It is scenario thinking, attention to market structure, and a clear-eyed understanding that Bitcoin’s value rests on a complex interplay of technology, economics and human coordination. That interplay can produce extraordinary resilience—and it can also unravel faster than believers expect.