Introduction – The Current State of the Crypto Market
The crypto market is a volatile one. It has been a rollercoaster ride, with the prices fluctuating wildly over the last few months. The prices have risen and fallen, but it is not clear where they are headed in the future.
This section will explore what has caused this volatility, how we can use it to our advantage, and how we can protect ourselves against it.
Reason #1 – China’s Ban on Crypto Trading and Initial Coin Offerings
China’s ban on crypto trading and ICOs has been a major blow to the cryptocurrency market. There is a lot of speculation about why China banned cryptocurrencies, but it’s hard to tell for sure.
Some people think that China was worried about the risk of fraud and scams in the cryptocurrency market, which could have destabilized the country’s economy. Others think that China is worried about the effect cryptocurrencies could have on its fiat currency, since it is still struggling with inflation.
Reason #2 – Regulation Scares Away Potential Investors
In a recent interview with CNBC, the CEO of Telegram, Pavel Durov, said that he would not be able to raise funds for his company if it were based in Europe. He went on to say that the EU is regulating too much and is making it difficult for small companies to get funding.
The European Union has been trying to provide a level playing field for all businesses by implementing regulations that are fair and easy to follow. But some of these regulations are scaring away potential investors because they think they will not be able to comply with them.
Reason #3: Cryptocurrency crashed due to scams, Ponzi schemes, and extreme market volatility.
Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently from a central bank. Cryptocurrency is not backed by any government or central bank.
Cryptocurrencies are the most widely used form of digital currency, with thousands of different tokens available for trading on cryptocurrency exchanges. Bitcoin was the first cryptocurrency to be created in 2009, and it remains the most popular cryptocurrency today. Other popular cryptocurrencies include Ethereum, Ripple, Litecoin, and Monero.
Reason #4: FTX’s bankruptcy sent shockwaves through the cryptocurrency market.
FTX, a major crypto exchange, raised nearly $2 billion in venture capital and other investments in three years. When the Bahamas-based company entered Chapter 11 bankruptcy earlier this month, it sent shockwaves throughout the crypto industry.
Additionally, since Binance CEO Changpeng Zhao announced that his exchange would liquidate its FTT tokens, the value of the cryptocurrency market has fallen by more than $260 billion.
The native cryptocurrency of FTX’s cryptocurrency exchange is called FTT, and Zhao’s decision to sell it was what ultimately led to FTX’s demise and its subsequent bankruptcy.
Reason #5 – The US Federal Reserve’s increase in interest rates had a negative impact.
Following the US Federal Reserve’s decision to raise interest rates to their highest level in nearly 15 years, the overall cryptocurrency market crashed close to yearly price lows.
Higher interest rates have a negative impact on the price of cryptocurrencies and all other dollar-denominated financial instruments, because it means that it becomes more expensive to borrow because loan payments are larger and so it forces people to save more and invest less.
In the short term, more interest rate increases are likely to cause more turbulence in the cryptocurrency market, but some analysts are still optimistic about the long-term course of events.
Conclusion.
The prices of the major cryptocurrencies are currently trading significantly below their record highs. At these prices, there is no point in booking losses because investors won’t be able to profit if prices increase once more.
The most crucial thing is to evaluate your perspective on cryptocurrencies over the long term. If you genuinely believe that Bitcoin represents the currency of the future or that blockchain technology has the potential to reshape entire sectors of the economy, you can begin accumulating Bitcoin at every level. Although no one can predict the future, as long as investors practice sound money management and risk management techniques, it will be simpler to profit from the current crypto price slump.