Why cryptocurrencies are going down in 2022?
On Thursday, the price of bitcoin fell below $26,000, the lowest level in 16 months.
Several cryptocurrencies’ values have fallen to near-historic lows in several days. The results were immediate and far-reaching. According to statistics from crypto intelligence company Glassnode, about 40% of bitcoin owners have lost money on their investments.
By CoinMarketCap’s estimates, almost a quarter of the worldwide market for cryptocurrencies is now worthless. After terraUSD, a cryptocurrency whose value is determined by a computer started trading below $1, the sell-off began.
The price of those assets has fallen to levels not seen before 2020 because of the sell-off by large cryptocurrency investors. Digital currency experts and questioners have been analyzing the fall and pointing out that it might be a wake-up call for investors about the dangers of digital assets.
Why is crypto constantly crashing?
The terra luna stable currency essentially broke the dollar this past weekend, which was a crypto-specific occurrence. Stable coins are a crucial aspect of the crypto ecosystem, and they are expected to remain stable. The U.S. dollar is meant to be worth exactly the same in both currencies. It’s a popular destination for investors looking for a safe haven amid market turmoil.
An algorithmic stable currency, Terra was valued at around $20 billion. However, there was “collateral” in the form of bitcoin worth little more than $1 billion. Because of this, many Terra Luna stable currencies were only backed by the confidence of other individuals in the system. As a result, the bank had a good old-fashioned bank run.
Stable coins are doomed when they de-peg like that. On Sunday and Monday morning, it just began to take hold throughout the digital asset ecosystem. It was only the last straw that finally snapped the log’s back.
Cryptography is far from becoming extinct, at least not in the strictest sense. I believe that we’re seeing a more widespread recognition that investing in crypto, particularly with money that is not just fun but is genuinely vital to your actual investments, and your capacity to pay the bills, isn’t a brilliant idea.
I’m starting to see the world through a different set of eyes. These enterprises, like terra, which claimed 20% returns, were attracting attention. They were confronted with the reality of what happens when things start to go wrong. And as a result, the Terrans are now short on funds.
Public opinion may change, and we may no longer witness the massive buzz and the big-ticket crypto purchases that we’ve seen in the past. Cryptocurrency will not only evaporate, but the blockchains will also disappear, and crypto will cease to exist. Despite the current state of the market, there is still a substantial amount of money to be made.
Here comes the most important part of this article!
Will the cryptocurrencies surge again ever? Is it good to invest now in crypto?
In the subsequent years, it’s possible to see a rise in the prices of the many blockchains. However, it might not be a sudden increase. But that doesn’t mean there won’t be a rough slope.
When will the market go back to stable?
Cryptocurrency markets are so volatile that it’s impossible to forecast what will happen next. It’s possible that you’re buying the dip, but it might also indicate that you’re buying the dip on the way down, and they could always go lower. Although some people are tempted, I feel it is a bad idea to do so. They’re also taking on a lot of risk in a scenario that has already begun to go south and might continue to do so for some time to come.