a fall to $1000 will now necessitate liquidation of ETFs and huge balance sheets which is different from the early days where recovery is not just about the natural growth from advocates but about finding and building trust again in the whole digital asset class for global finance.
ETFs are only responsible for the move from ~40k up. Of course they bought also from early adopters, so it's also too easy to say "Bitcoin can only fall to / has a fair price of 40k if the ETFs go out". But I think institutional investors aren't making up much more than half of Bitcoin's value.
Where I agree more is with you next statement:
If Bitcoin falls to $1000 as a result of liquidation wave the rise to $5000 may be fast like you mentioned but then, if Bitcoin gets to such level via the triggers you stated, then we looking at a foundational move in the narrative . In such cases like history suggested, the recovery process of the price may take more time than the crashing phase took.
This is totally possible. If the bear market leading to the "terminal $1000 crash" takes 3 years, then the recovery to the current levels (let's say 50-60k+) may take more than these 3 years. However, before 2020, Bitcoin went quite fine with a narrative mostly driven by adoption by retailers and "common people". This narrative could then regain traction, and take Bitcoin to about 20k in a year or two, and thus again to levels where Bitcoin can't be ignored and would be a major asset again, at the level of "secondary" precious metals like Platinum. If it can stabilize there and retailers aren't fleeing it en masse because the narrative again stabilizes, a gradual increase could be possible.
Honestly, I could not figure out the purpose of this type of speculation, [...] except spreading FUDs.
It's exactly the contrary than FUD. My intent with this thread is actually make people
lose fear
Many people fear that Bitcoin could go "to zero", because it's worth "nothing". They ignore that there is not any asset with competing characteristics that could replace it (with the exception perhaps of some altcoins like Monero, but they very likely would also crash hard in such a scenario), i.e. a totally decentralized payment network without any middlemen and strong security.
The goal here is: crashes can always happen. Humans like herd behavior. And shorters know that, and they love doomsday scenarios. A chain reaction could, in extreme circumstances, thus trigger a very deep crash. Perhaps not to $1000. But a crash back to the COVID levels about $5000 would be equally scary.
Basically what this thread means it: No matter how deep a bear market or crash is, if there's nothing fundamentally broken with Bitcoin, nothing changes in its real value proposition. And that means that a very deep crash is very likely an excellent buying opportunity.
The biggest problem with "catastrophic annihilation" of the price is that it destroys confidence in bitcoin, and this is while bitcoin is already being categorized by many people as a "high risk asset" and that's only with the volatility we have had so far where we see 30% crashes at most; and then every cycle after a huge bubble we see a 70% to 80% crash.
But with -99% catastrophe, people won't have any confidence in bitcoin any longer to put their money into it. This is why I said it would take at least a decade.
I wrote about that a bit already in my answer to @Rain1620.
A decade seems too long to me. Because a recovery to $20k, from $1k, can happen in a single year as 2017 showed. And there's another thing: People remember how high Bitcoin's price was. And if they see that the $1000 catastrophic dump didn't change anything in the network (perhaps lowered the hashrate a bit, but no catastrophic "death spiral" etc.) then they may convince themselves very fastly that the $1000 dip was a total overreaction.
My guess is the recovery could take the same time than the time from the COVID dump ($4000) to the $100,000 (4-5 years) to reach $100k again.
We aren't in early years, we would be entering 2030+ and we may actually see other competing cryptocurrencies be invented (not the shitcoins that we've seen so far that claim to be "better" but something that actually is) and a crashed bitcoin could easily be replaced and forgotten.
This is why I mentioned this scenario in the OP. If there's really "something better" (not some shiny shitcoin), then indeed there may be a replacement. But the most likely scenario is that the competitor would crash too in the Bitcoin bear, as it occurred in all previous crashes with almost all altcoins. It would have to be a competitor much stronger than current's Ethereum for example.
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