With red candles painted all over the crypto markets this week, we’re sure one question rests on the back of all our minds — can bitcoin crash even further from here? Although several price models argue that there’s still a lot of gas left in the tank for BTC this cycle, it’s always good to understand the opposing view. Taking time to consider the worst-case scenario for bitcoin can help you navigate the markets accordingly.

Here are a few risks to note that should help you personally determine if BTC will crash from here:

• Regulatory Risks

• Macroeconomic Risks

• Miscellaneous Risks

Recently, former presidential candidate Hillary Clinton warned that bitcoin has the potential to destabilize nations and traditional currencies. This may very well be the general sentiment regulators have against BTC and other cryptocurrencies. Crypto, being a decentralized form of money, is outside their control. And what do governments love more than control?

While bitcoin’s distributed ledger is near impossible to shut down, the strongest governments in the world can make it very difficult for the public to purchase or trade BTC. If stricter regulations are introduced in the coming months, this may scare off investors from buying BTC, leading to a drop in bitcoin’s price.

An example of possible rules that could be introduced in the near future is those recommended by the Financial Action Task Force (FATF). Their influence might make it harder for self custody and anonymity in the owning of digital assets.

Another regulatory concern to note is the narrative behind bitcoin mining’s effects on the environment. While these anti-environmental claims have been mostly debunked, there’s no denying that false information can paint BTC in a bad light. For example, last May, Elon Musk said that Tesla would stop accepting bitcoin until the network’s environmental effects are addressed. Bitcoin’s crashed a few days later by over 50% in some exchanges.

The Federal Reserve has printed and released trillions of new dollars to address the effects of COVID. As seen with bitcoin’s price action last year, it has been a blessing to risk-on assets. More money in the system makes leverage cheap and allows investors to divert more funds into speculative assets in order to beat inflation.

Unfortunately, the government can also reduce the amount of money in the system through tapering or increasing interest rates. This move often leads to a crash for stocks and cryptocurrencies.

One factor to consider in determining whether or not regulators would increase interest rates is the current level of inflation. If to them, inflation becomes no longer transitory but something that should be addressed, expect red candles across the markets.

Apart from this, one should also consider the current concerns regulators have with stablecoins like USDT. One US dollar Tether minted is supposedly redeemable for one US dollar in their reserve. Unfortunately, their reserves have since then been suspected of being fraudulent and unsupported.

USDT makes up for a majority of the liquidity in the current crypto markets. Tether going bust could be a black swan event for bitcoin and other cryptocurrencies. Fortunately, decentralized and algorithmic alternatives to USDT like UST are defusing the Tether time bomb.