The game of risk and rewards. Cryptocurrencies have seen major adoption in the past few years. Not just from the mainstream investors, but also from ordinary moms and Dads. The crypto market has barely gotten over the spectacular crash of the algorithmic stablecoins, UST. This has worried many investors. Some people are done with cryptocurrency investing forever. The crypto market has always and will always be volatile, but sentiment is at a multi-year low. The market cap keeps going down, scams are getting announced everyday, hacks continue and many see no end in sight. Why is sentiment so low? Why is the market selling out? What can you do now?
Here are some reasons why the market is selling out:
The War in Ukraine
The war in Ukraine is a major factor that is influencing the financial markets. Ukraine is a major supplier of wheat to some countries in the world. But since the war, there’s been a rise in the prices of food, wheat in particular. This makes people scared of the future and causes them to invest in safer assets.
UST and Luna goes to Zero, Taking Billions of Investors Dollars with It
Luna and its sister stable coin Terra crashed from $100 to a percentage of a cent. The Terra stable coin left the 1 dollar peg and is currently at $0.05. The fall of this coin is miscredited to a malicious attack, but it is a design function of the Luna algorithm to print Luna when UST goes below $1. This caused hyperinflation to destroy Luna as Terra continued to fall. But does it mean crypto is not as secure as we think? No, the vulnerabilities of one coin don’t determine the security of the other networks. Only time will tell the whole story of the Terra Luna disaster, but the damage is done.
Inflation Drives Investors Away
This dip is largely fueled by inflation which is driving people away from investments as they spend more money on daily necessities. The rising cost of oil prices and general day-to-day living has caused many financial markets to sell out, including the stock market. People are selling their investments to make ends meet.
There was a story of a wallet that moved 2000 Ethereum into the market and sold it off to be able to pay the debts that he was owing in another coin. Then there is the news of Coinbase letting go of some of its workers.
One of the trusted centralized exchanges, Coinbase Pro is closing operations and re-branding to Coinbase ONE The dip has indeed been bloody and numerous people were caught off-guard. Some even proceeded to put more money into Luna while it was crashing, thinking that it was another opportunity to make a lot of money buying the dip.
Bear Market Strategy Tips
Dollar-Cost-Averaging (DCA) Reduces Risk
I will advise you to only buy the dip that has bottomed out and even when doing so buy in tranches. Many prefer to buy once the trend is reversed. This is not the first bear market that has hit crypto, and it probably won’t be the last. But the popularity of this dip shows proof of higher adoption of the technology. The general market sentiment as seen in the Bitcoin greed fear index is completely in the fear range. We should also keep in mind that other financial markets are also seeing downtime.
Take a Break from Charts – Enjoy Life!
Set it and forget it with scheduled purchases and reduce your stress. This is probably the time to stay off the charts. This is the time to go watch a movie and wait until it bottoms out. This is when you should be chasing airdrops. Airdrops are an excellent way to earn money in the crypto space. But beware of scammers. Use this period to brush up on your knowledge. Do more research about crypto technology and how we can remove bad actors. The NFT market is still young and booming. Look into getting a few if you haven’t. For more information on NFTs check out our article why are NFTs valuable.
I strongly believe that the market will get better soon, and we will be back to the days of green candles.