The crypto asset market has been experiencing a bearish run over the past few months. It has resulted in many investors losing their money. There are many reasons behind this sudden downfall. This article covers the causes and insights into the current crypto market crash.
The Recent Crypto Market Crash
The world’s largest crypto asset, Bitcoin, fell as low as $28,970 on 30th May 2022. This is almost -43% since its highest of $50,822 last December. Total bitcoin market capitalization has gone below its lowest level in ten months. The global market worth has gone down to $1.41 trillion. Since there is no inherent, intrinsic way of measuring the actual cost or value of the crypto asset, cryptos were priced depending on the transient demand and supply for many months. The crypto market is on a bearish trajectory also due to fear of recession in the time to come.
Crypto assets have been around since 2009 but only recently have they become mainstream. In 2017 alone, the price of Bitcoin in the crypto market had grown to over 1300%. It means that the number of people investing in cryptos has increased exponentially. However, this increase in popularity has led to many investors getting into cryptos without knowing what they’re doing. They don’t know how to buy, store, or even understand the technology behind cryptos.
The Strategy
The bitcoin price has crashed by 32% from its highest on 5th May 2022 to its lowest on 12th May in only one week. It is a considerable fall, and many people wonder what caused this sudden drop. Is it possible that the crypto market crash was planned? Was it a deliberate move by the government to bring down the value of crypto assets? Or could it have been a glitch in the systems working on this? What can be done in this case?
- The strategy to follow here is to understand that the price of crypto assets is highly volatile and can go down dramatically. If you buy at a lower price, you could profit from the increase in value. However, this only works if you have enough time to wait until the price goes back again.
- Diversifying your portfolio is extremely important. If you only invest in one type of asset, you could miss out on potential gains. Try to own different crypto assets and not just Bitcoin.
- Holding onto your investments even when they go down. Many investors get scared off when their investment goes down and sell their coins at lower prices. However, if you want to invest money in cryptos, you should hold until the price comes back up.
The Crypto Market Downslide
The crypto asset market has seen a massive sell-off in the past few days. The considerable drop is a global phenomenon primarily attributed to recent developments in the macro-environment, such as increasing inflation, rising interest rates by the Federal Reserve, and the Russia-Ukraine war. The most intriguing part here is that the crypto markets mirror traditional financial markets. Both are seeing a correction, which is a good sign. It signifies that the crypto markets are achieving maturity. Like other markets, we can witness crypto going through a bear and bull run, and at present, it’s majorly in the bearish phase.
Reason for Crypto Market Crash
- One of the biggest reasons for the crypto market crash today is that many of these currencies aren’t regulated by any government agency. For this reason, there’s no way to tell if the company selling the currency is legitimate or not. If something goes wrong, there’s nothing to regulate the situation.
- The crypto market has been under pressure from increased regulatory scrutiny and negative news reports about security breaches, hacks, and frauds. There are also inflation fears in the broader market.
- People are more inclined to sell now. It is one of the reasons for the crypto market meltdown. The fall of the crypto world is also due to liquidity that has dried up. The central bank’s hiking rates and the dollar index rising have resulted in a fall in trading activity in crypto.
- Another significant factor in the decline of the crypto market is that many people are buying coins just because they think they’ll go up in value. People buy coins to hold onto them instead of using them to pay for things.
- Finally, the last reason for the decline in the market is that many people are losing faith in the future of crypto assets. They feel that the technology isn’t ready yet and that we need to wait for regulations before we can use them.
Some of the major factors driving the current sell-off of crypto assets
- The Bitcoin price has been falling since its ATH price of 8th Nov last year.
- The market cap of bitcoin has fallen from $1.27T to $583 B.
- There are only two exchanges, Binance and Bybit, that have any significant volume left.
- The bitcoin value has dropped to almost half.
- The trade volume has fallen to $25 million.
- The average transaction size has fallen significantly.
Conclusion
Experts at Unocoin say that diversification is a strategy where investors spread their money out across different types of assets. Instead of putting all of your money into just one type of asset, it is always advisable to invest in different kinds of assets. It may include stocks, bonds, commodities, real estate, and more.
If you are patient enough, your investment will give you good returns. Some people believe that now would be an excellent time to get into crypto mining or investing. However, many people believe that the price of Bitcoin and other crypto assets will continue to rise over time. There’s no doubt that some crypto assets will continue to grow in value. However, others will fall out of favour until their technology becomes better known. Some analysts believe that the crypto market could still experience a recovery despite these challenges.
Unocoin is India’s first and the most secure bitcoin trading app. This exchange app was founded in 2013. You can buy and sell bitcoin instantly using the Instant Buy and Sell feature. Not just this, you can also buy ETH and Sell ETH in no time. With more than eighty-seven coins listed on this best cryptocurrency exchange in India, you can also accept bitcoin from your friends from any location. You can also know which cryptocurrency works best for you with the price ticker and notifications. The most popular cryptocurrencies like Bitcoin (BTC), Ether (ETH), USDT (Tether), BNB, Ripple (XRP), Cardano (ADA), Solana (SOL), Binance USD (BUSD), Dogecoin (DOGE), Polkadot (DOT) and other popular altcoins can be traded on the go. The new Android and iOS applications make Unocoin the best cryptocurrency app. With the unique feature of the Systematic Buying Plan, you can buy and sell Bitcoin and Ether periodically. What more? You can start your crypto journey using SBP for as little as INR 10. With another exciting feature called Crypto Basket, you can diversify your crypto portfolio based on market capitalisation (Market Cap) or Volume. These two excellent features make Unocoin the best cryptocurrency platform.
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Disclaimer
Crypto products are unregulated as of this date in India. They could be highly volatile. At Unocoin, we understand that there is a need to protect consumer interests as this form of trading and investment has risks that consumers may not be aware of. To ensure that consumers who deal in crypto products are not misled, they are advised to DYOR (Do Your Own Research).