According to Bloomberg forecasts, bitcoin ETFs will overtake gold ETFs in terms of investment scope. The only obstacle on this path would be a black swan event. What black swans are possible for bitcoin and BTC ETFs? How realistic is such a risk-related scenario?
Black swan events for bitcoin and bitcoin ETFs refer to low-probability, but high-risk events that could deal a serious blow to the cryptocurrency industry. Here are some possible black swan events:
1. A regulatory crackdown or outright ban: If major countries take severe restrictive measures against cryptocurrencies, up to and including a complete ban, this would greatly undermine the credibility and investment appeal of this asset class.
2. Critical blockchain vulnerabilities: the discovery of vulnerabilities in the bitcoin code or other leading cryptocurrencies that would allow their security to be attacked could completely destroy trust.
3. A 51% attack (also known as a transaction denial of service). A successful attack where a single entity or organization is able to control the majority of the hash rate would break the consensus and lead to a network split with unpredictable consequences.
4. Sharp increase in energy costs: Serious energy and environmental problems due to mining could force the authorities to take emergency restrictive measures.
5. System-wide failure of crypto exchanges/wallets: hacking or failure of leading crypto exchanges and cryptocurrency storage services could trigger a market collapse and reduce confidence in the industry.
Overall, while the likelihood of such catastrophic scenarios is quite low, they cannot be completely ruled out. Given the relatively small scope of the cryptocurrency market, a confluence of negative news could trigger a large-scale flight of investors from the market. Therefore, the black swan risk should be duly taken into account and factored in by all market participants.