A few days after the global collapse of almost all cryptocurrencies, they have acquired color again and are beginning to stabilize. However, the cryptocurrency market fell 20-30%. Have we been in a bubble, and does that mean the end of it?
As we have always said, the cryptocurrency market is a very volatile market, and after a long period of improvement, it should probably not come as a surprise that a sharp correction appears. We recently saw that a single man can greatly influence the course.just saying. His only intervention done then lower the price and announcements of his company rain and light on the bitcoin rate.
The main reasons for the growth of cryptocurrency
In recent months, he was not the only one who participated in this period, when it seemed that nothing could stop the rise in prices we were observing.new cryptocurrencies, accompanied by the double effect of democratizing cryptography among small investors, associated with professional and institutional investors entering the market, have played strongly in favor of this growth. More and more crypto influencers are also touting easy profits on like Instagram or attracted many investors who mostly lost Last few days.
Causes of the accident
This accident is onthis is a characteristic panic among global investors and the result of the actions of several opportunists. This can be explained by several factors:
Tesla’s Announcement Canceling Opportunityin Bitcoin for environmental reasons and China’s announcement to strengthen its cryptocurrency regulations.
If Elon Musk highlights environmental impactChina’s decision to block trade on its territory is extremely energy intensive to explain its decision, and is proof that this unregulated market continues to be of concern to the authorities.
However, the effect of the announcement alone is not enough to explain this sudden and significant drop. Investors entering this marketand institutional in recent months have also changed the behavior of prices.
Several observers also notedlarge exchanges and large enough to influence the price of a cryptocurrency. First, there were several hundred thousand leveraged transactions. Too much volume for small carriers. It was also found that very large volumes of bitcoins were sold around the time of the various announcements, before they were bought back a few hours after the price fell.
In such a volatile market, the cumulative effect of announcements and the combined and synchronized action of large investors may explain this price drop.
What is the future of cryptocurrencies?
After this observation, several conclusions emerge. First of all, the marketremains attractive and prices are likely to rise again after this fall. It can even be an interesting entry point for new investors.
This will not be the last crash we will see. Until the market is regulated, cryptocurrencies will be a playground for unscrupulous investors who can manipulate the market to their advantage through announcement effects or high-volume transactions.
Thus, regulation is necessary to protect small carriers, but this may even contradict ideologyand cryptocurrencies. State regulation also runs the risk of slowing price increases and not catering to the market.
The blockchain economy is still in, we may still have pleasant surprises of growth for a while, but also a further sharp drop in prices in anticipation of stabilization of the market and players.
What you must remember
- Strong rise in cryptocurrency prices in recent months following strong market democratization and the emergence of professional and institutional investors.
- The fall in prices after the announcement of Tesla and China, as well as after major moves among large investors.
- A market that still needs stabilization and will remain very volatile.