Several cryptocurrencies’ values have fallen to near-historic lows in the last several days. The influence was immediate and wide-ranging. Data from crypto intelligence company Glassnode indicates that over 40% of bitcoin investors have lost money. According to CoinMarketCap, more than a quarter of the worldwide cryptocurrency market has vanished.
In the wake of terra USD algorithmic decline below $1, the cryptocurrency market has begun to sell down. Because of the sell-off by large cryptocurrency investors since then, the price of these assets has dropped to levels not seen before in 2020. This has led some cryptocurrency experts and skeptics to speculate on how this crisis may affect digital money, adding that it might serve as a reminder of just how volatile digital assets really are. So, what are the real reasons for the crypto market crash and how long will it last? If you are interested in this topic, continue reading.
Reasons For Crypto Market Struggling
As global inflation rises, investors seem to be shifting away from bitcoin toward more stable assets. After a dramatic fall in the price of American stocks, cryptocurrency has been dragged down even further. “Bitcoin is trading lower today after yesterday’s dramatic decline in US stock prices,” Bitfinex analysts stated in a statement. “Worldwide financial markets have been left gazing into the abyss as the potential of a global recession looms large because of rising inflation.” As interest rates increase, all assets that have benefitted from the central banks’ long-term accommodating monetary policy will be at risk.
Institutional investors’ interest in cryptocurrencies has made it more susceptible to interest rate changes and behaves more like the stock market. Cryptocurrency traders are no longer dominated by retail investors. Crypto institutions account for the majority of daily crypto trading volumes, with a big percentage of it coming from trading with one other.
As an example, the business said in a press release that “exchanges, custodians, and crypto funds” are all examples. Four years ago, when Bitcoin was trading below $10k, retail traders dominated. “We believe that the growing engagement of institutions, which are sensitive to the availability of money and consequently interest rates, has led in part to the strong connection between Bitcoin and stocks.”
Because of the crypto market struggle and the way it develops, many investors ask whether or not it is worth investing in cryptocurrencies. Those who want to make money at this moment can buy some major currencies like Bitcoin and Ethereum and hold them for years until they reach the point, which will be beneficial for the investors.
On the other hand, those investors who want to make money in a short period of time can use the swing trading strategy, which allows them to speculate on price movements. In the moment of market fluctuation and volatility, swing traders can get benefits. However, the main thing to take into account is to buy the currency that is comparatively authoritative, in order to avoid the Luna coin accident and going bankrupt. However, even in this case, there’s a solution. Investors can use softwares like Bitcode Prime, which furnishes customers with an opportunity to set stop-loss orders. With this order, they can indicate the value of the currency on which the software will stop the trading process. For those investors who don’t want to look at the screens of AI-generated tools, automating trading processes is heaven.
Will Crypto Market Recover?
The future of cryptocurrencies is, as always, unpredictable. There is some optimism for crypto investors due to the fact that large corporations are beginning to get in on the action. There are a number of Wall Street corporations with specialized cryptocurrency teams, including JPMorgan Chase, Morgan Stanley, and Goldman Sachs. Alan Howard and Paul Tudor Jones, two of the most prominent hedge fund managers, are investing billions of dollars into digital currencies.
Digital asset management Pantera Capital partner Paul Veradittakit told Bloomberg: “Compared to 2018, there are more institutional investors with exposure to cryptocurrency, and most view this as a buying opportunity.”
The chief marketing officer of Coinbase, Kate Rouch, is optimistic about the future of crypto. She described volatility as “painful and frightening” in a blog post. Short-term losses in the stock market or in the cryptocurrency market are not desirable. But it’s also normal for new technologies like cryptocurrency to experience volatility. Our long-term perspective and the spirit of innovators, regardless of the external climate, are inspirations for us at Coinbase. People are wondering if we’ve entered a “crypto winter” or a “crypto ice age” as a result of the recent developments in the cryptocurrency industry.
Since July, the price of Bitcoin hasn’t closed below $30,000; nevertheless, the decrease did not provoke a big sell-off and the price is now seeking to regain $30,000 in the Thursday Tokyo session,” Yuya Hasegawa, an analyst at Bitbank, said in an emailed note obtained by Forbes. This may be a positive sign for crypto investors since the likes of Facebook, Google, and Microsoft are getting involved. If we look at the crypto past data, we can find that the cryptocurrency market had significant downs and spikes, so, it’s most likely that the crypto market will recover, however, no one knows the exact date.