Assalam-O-Alaikum!
Greetings to all of my hive fellows. I hope that all of you are Okay and I wish to see all of you in good health and ideas. platform nowadays. Today, I will explore the topic given which is 'Reviewing the Instability of the Crypto Market '. In this post, I will discuss that.
Most of the cryptocurrency market is currently experiencing a sharp decline, especially in recent days. What do you think of this drop? State its causes and how long do you think it will continue in this downtrend?
Cryptocurrency is a virtual currency that was created in past by Satoshi Nakamoto in the form of Bitcoin. These are the digital assets that can be traded and exchanged with other cryptocurrencies in the marketplaces that are known as 'Exchanges'.
Cryptocurrency trading is so much risky as the market of cryptocurrency is very flexible and volatile. It is always advisable to stay away from cryptocurrency investment if we do not have proper knowledge about crypto trading.
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This flexible nature of the crypto markets urges it to increase or decrease variably due to various factors. Nowadays, the market of crypto is facing a huge loss the values (prices) of all the cryptocurrencies have reduced to at least half of their previous value.
This dump is the cryptocurrency market is not new but many of the new traders are very much depressed due to this huge loss in the market. The current market trend is highly bearish. Yesterday, on May 16, 2022, the market stabilize itself to a very small extent but before that, the whole crypto market was red.
Various factors affect the price of cryptocurrency. Some are listed below.
When the supply of the cryptocurrency in the market becomes more than its demand in the market, it causes a decrease in the price. This is happening these days, the number of sellers has increased and the market showed up a huge bearish trend.
The main reason for this huge dump is the loss of altcoins. Altcoins are following Bitcoin's price. When Bitcoin losses its worth, the altcoins are also reduced double or even multiple times than Bitcoin.
There are some other factors like the reduction of crypto investors from the market. When the whales of the market left the market, it showed up a huge drop.
Another reason for this drop is the issues in the function of the blockchains to which the cryptocurrency belongs. This thing also affects the price negatively.
As we have already told about the fact that the market of cryptocurrency is so volatile that the drops and dips are a usual case in the market. I will say in this regard that this drop is not for a long time. We have already seen many drops in the history of cryptocurrency but we have also seen the recovery of these dumps in the past. Many times, the investors left the market due to some invalid and wrong information. But when they realize the real cases, they rejoin the market, and the price recovers.
In the present case, I will say that the downtrend will recover very soon. When some whales of the market left the market, some small traders became worried and also left the market which cause a huge downtrend in the market. When the whales rejoin the market, the price will stabilize and the traders will rejoin the market as well. This will improve the present condition to a great extent. I hope that this loss will be removed in a maximum of two months. We can expect it sooner but two months are maximum for this purpose.
Why doesn't this drop in the price of a few coins decrease their trading volume (eg: Bitcoin)? How will they deal with this market instability?
These days we have seen a very huge drop in the prices of the popular cryptocurrency including Bitcoin and Ethereum. Recently, the Bitcoin dropped below the $30K but we have also seen that the volume of the market is still not too much affected. This is a signal that the investors of the market are still confident and holding their assets instead of selling them.
The downtrend of the market is beneficial for the traders as they have got another chance to invest and hold for the wait for a profitable price. In general, when the volume is not decreased but the price is dropped, it is a true signal of an upcoming bullish trend. So, we can expect a very huge bullish trend in the market very soon. Last time, BTC jumped from $30K to about $60K. So, we can again expect a new resistance level very soon.
- Dealing with this Instability:
The traders that are too much worried about their huge loss, do not have to be worried. This is the time to enhance your investment and hold it for a long time in the seek of a huge profit. Many traders have a habit to visit their portfolios again and again. But in this condition, we have to buy a coin and then forget to visit the portfolio for some days and can hope for a profitable value of that coin very soon.
What is the relationship between the current instability and the downfall of the Terra ecosystem and its Luna currency? Do you think its price will bounce back? If so, tell us how and when?
We have seen a very huge loss of the Terra coins including the stable coin of the Terra ecosystem, TerraUSD (UST). Stable coins are stable crypto assets that are not affected by the overall market trend. These stable coins are supposed to peg to the price of real-world assets such as the dollar, euro, sold, etc. UST was supposed to peg to the value of the dollar which is 1$. But unfortunately, UST stable coin was unpegged from 1$ and it faced a very huge loss of about negative 70%.
Firstly, we thought that the Terra ecosystem has been affected by the loss of its major investors that were holding the UST as their savings but later we also got the news that the ecosystem has experienced this huge loss due to the mismanagement of the Terra ecosystem. By default, the governance token of the Terra network (LUNA) is used to stabilize the UST, but we have also seen a huge loss of LUNA in the last week. LUNA was unbelievably trading below $0.01 and this is, I think, the largest loss in the crypto history. The Terra team is working day and night to re-peg the UST coin to the dollar (1$) and we can hope for betterment very soon.
Conclusions
The market of cryptocurrency is highly-volatile and this thing is a fact that the decrease and increase in the prices of cryptocurrency is a usual case. This condition of the crypto market is due to various factors like demand is low and supply is too much extra, investors loss, and many more. I think that this drop will recover very soon and we will see a green market very soon.