Over the past few months, you have probably noticed some big shifts in the crypto market — and the most recent changes have caused even more panic among cryptocurrency holders than usual.
So why is crypto crashing so hard? And will it ever recover?
Let’s explore what’s causing the current cryptocurrency market meltdown and what is expected from it in the future.
Why is crypto crashing?
The crashing of cryptocurrency prices can be attributed to several factors. For example, the Chinese government changed the Chinese stock and cryptocurrency markets by banning all exchanges from operating in China.
In addition, many cryptocurrencies had huge spikes in value that caused a frenzy among traders looking for quick gains. These spikes in price left investors with less-than-ideal timing trying to sell their holdings when they quickly lost value.
Furthermore, trading volume has fallen dramatically as more people have gotten involved with the cryptocurrency market.
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How did it get so high in the first place?
The initial pump in the market came from people’s fear of missing out. When the cryptocurrency market had a period of exponential growth, everyone wanted to get in on it. People saw prices shooting up and getting rich quickly and wanted to join in on the action.
But, it’s also important to consider why crypto is crashing when we look at all of this data. Bitcoin is worth what it is because people have given it value through the mining process that creates new coins.
As the total supply of bitcoin increases, its value will decrease because more coins will be in circulation than before. Many other factors also contribute to the value, but these are some of the most influential factors on bitcoin price fluctuations.
How bad is it?
The crashing of the cryptocurrency market has been due to a lack of confidence in Bitcoin and other currencies. Prices are getting worse with so many traders pulling out their funds and cashing out.
Some analysts believe there is a cyclical trend at play here: as prices go down, more people sell off what they have because they don’t want to lose any more money. As these sellers come in and liquidate, prices fall even lower than before.
Will Crypto Recover?
The recovery of the cryptocurrency market will be gradual, as the industry has yet to see any significant signs of a recovery. If you are looking for short-term gains in cryptocurrencies, it is best to exercise patience and wait for the market to stabilize. When will this happen? It’s hard to say, but investing in your future is always a good idea.
A Long Term Outlook
Based on the sentiment in the crypto markets, many investors seem frustrated. The concerns of current investors and would-be investors all seem to have their answers to this question. Below is a brief overview of some of these sentiments, what they represent, and their likely reasons for thinking this way.
- Troubled by Potential Regulations – Investors who believe crypto will not recover soon or at all tend to be most worried about potential regulations by governments into the crypto market.
- About Market Manipulation – Other factors contributing to negative sentiment around crypto include worries over market manipulation and fraud.
- Fraudulent Initial Coin Offerings (ICOs) continue to emerge as well as other scams within the crypto space which can lead investors to feel uneasy about putting more money into digital currencies
Seemingly, the cryptocurrency market stabilized after the worst of the crash in late 2018. However, there is no telling when the next crash will happen or how severe it will be. Some say this is an opportunity to buy cheap coins and wait for them to recover in value. Others say that as long as crypto has a use case and companies adopt it, we can expect steady growth over time.