Impact of Crypto Collapse on the Crypto Community Market

  • May 26, 2022
  • Admin_Blockchain
Impact of Crypto Collapse on the Crypto Community Market

In the past few years, the cryptocurrency market has attracted various traders to invest in digital assets. Bitcoin continues its predominance among digital assets with a 44.27% market share. Although there has been a history of the bitcoin crash, the sudden drop in last weekend has been a shockwave for investors. The drop has caused panic among the TERRA UST and TERRA LUNA investors. The sudden fall caused investors to sell their assets causing a huge loss to TERRA UST.

Using Bitcoin as a Protection Against Rising Price

For the past few months, the stock market and the crypto market have been working hand in hand. Both S&P 500 and Bitcoins hit the highest together in November, proving the two markets are moving in the same direction.

Investors were under a myth that top cryptocurrencies would remain unaffected under inflation. However, that is not always the truth as the investors witnessed earlier this month. The crypto collapse was affected as a result of tighter monetary policy and a high increase in price.  

Also Read: How to Track Stolen Cryptocurrencies?

Is Crypto Market Crashing?

For the first time, Bitcoin has hit a downfall of almost 50% since its peak in November 2021. Anyone who invested in bitcoins may end up with 40% of their investment worth less than the notional value.

Six months ago, the bitcoin price reached its peak, which has now fallen halfway. Even though many investors are still worried about a collapse, with its history, the prices will not remain low forever. This is why many investors are still planning to not sell their digital assets. 

After the sudden downfall of 4% Bitcoins over the weekend, the value has decreased up to 18% over the last month. In 2020, the largest decline of 35.4% was observed. In 2021, Bitcoins faced a downfall of 18.1% month of July, while in December, a 19.1% downfall was observed. In the past few months, the crypto market has faced a severe downfall.

Bitcoins worth three billion dollars have moved into or out of exchanges in the last week. This is so far the highest since November 2021. The market value of all cryptocurrencies has fallen 16%, which rounds up to more than one trillion dollars. The total downfall from its highest in 2021 is 65%, rounding up to more than three trillion dollars. Experts suggest that by 2030, the crypto market will reach $4.9 billion. 

Also Read: Setting up Your Own Crypto Exchange, the Smart Way

Chances of Recovery from the Crypto Collapse?

The entire market might take six months or more to get back with a positive price. However, by the time that takes place, 90% of the cryptocurrencies will die due to the amount and liquidity situation. 

Given the sudden slide in bitcoin prices and the shock of inflation, the crypto market enthusiasts are in a fear of the crypto collapse. Since it’s a trading market, risks are a part of it. However, experts hint that the market value will stabilise with time.

In Conclusion

Cryptocurrency is a volatile market. Investing in bitcoins while the prices go down can be risky, as it may become a long-term trend. Although the history of bitcoins suggests a short-term downfall, yet, with zero certainty, the prices can fall further, leaving your asset’s value lower than your original amount.

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