The Reasons Of The Crypto Crash In 2022 - How To Deal With It

3개월 전

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Cryptocurrencies are not immune; they suffer significant losses over time as a result of a variety of circumstances. When a significant price collapse occurs, individuals and organizations lose a lot of money, and sometimes a price crash is more than just the price of a coin or two; it might mean the end of a long-running crypto project. Let's review the nature of the recent crypto-space crisis, as well as the factors that surround it. Let's get started right away.


The Reasons for 2022 Crypto Crash


The cryptocurrency ecosystem is complex, influenced by a variety of external and internal factors. We will never be able to know everything that caused the recent market downturn. This is the situation due to the intricate links between crypto fiscal and monetary policy.
Instead, I will focus as much as possible on the more visible and logical causes of the recent events surrounding cryptocurrencies. Let's get going.


Negative Publicity.

Some crypto projects have collapsed, causing many people to lose a considerable amount of money, and they continue to condemn the project as a result of the crash and loss. The fall of the Terra (UST) stablecoin is the most notable of these. Stablecoins were created to be trusted as a more safe store of wealth than extremely volatile coins, so this is a nonsensical concept. With the crash of UST, most people who have liquidity in other stable coins (like as BUSD and USDT) may begin to question their stability, leading to liquidity removal and selling off their funds. This we can see as the price of USDT falls from the 1 dollar peg, adding to the negative things, thereby causing people to doubt and withdraw off from crypto.


The Ukraine-Russian War

The impact of the Russian-Ukrainian war on the global economy cannot be overstated. I've only recently learned how true it is that the world is a global village, and that what harms one harms all.
This fight has resulted in unprecedented burdens and issues, resulting in not only human sorrow but also the bankruptcy and collapse of some well-established businesses. Apart from the US military economy, all other sectors, both tech and non-tech, have recently suffered a significant blow.

Like the stock market, cryptocurrency has also been in terminal decline. Since the commencement of the war, the crypto market has experienced a succession of negative moves in both major and minor cryptocurrencies.


LUNA Crash

Following the major crash of the Luna coin, the Luna project and its ecosystem (Terra) abruptly failed, adding to the unfavorable news surrounding cryptocurrencies. It's startling to see billions of dollars collapse in a matter of hours. As a result, most investors lost faith and started selling off a their hodlings believing it is safer to withdraw their money, this then culminated in a big bearish trend.


Why Terra Project Failure Has Contributed To The Crises Of Crypto


The failure of the Terra ecosystem, including its currency Luna and stablecoin UST, is a severe blow to the cryptocurrency ecosystem. This incident has a direct link to the current crypto crisis, while it is not entirely related. We could say that the two events have a statistically significant relationship.

To understand the relationship, one must first understand the purpose of the Terra ecosystem in the crypto space. Terra was one of the top ten cryptocurrencies with a unique project, and given its prominence in the crypto ecosystem, any changes in it will affect the entire cryptocurrency ecosystem.

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The crash of the Terra project made a lot of people homeless, I was one of the individuals that lost a significant amount of money in this project. This event harmed people's trust in key crypto projects and trust in stable currencies in general. This event frightened many individuals away from bitcoin and other altcoins because it was both disappointing and a betrayal of their trust.

The disastrous failure of Terra has simply added to the reasons why people are being suspicious of crypto, and this impact can only be felt throughout the market.


Will LUNA Ever Recovers?

It's hard to believe that Luna will recover. The team behind the project don't appear to be interested in bringing it back to life. Despite the fact that the activities that led to the project's closure may have been poor choices, nothing is being done to bring it back, at least to my knowledge.

Luna is currently simply another shitcoin on the market, and it could be forgotten in a few years. We can't predict the future, but it doesn't look good for the Luna coin.

But there is still reason for optimism. Someone else could take on the project and help clear up the terrible things that these issues have created. It will take a significant amount of time and effort, but it is possible. I also heard the team are planing for a fork (Luna2.0). Let see how it goes.


How Much Longer Will This Market Crash Last?


We have no way of knowing when this will all end. We can, however, use disease as an example. The only way to get rid of the infection is to get rid of the bacteria that are causing it.

When we apply the above example to the crypto market, we can easily predict that the market will stay the same or worsen as long as the forces at work persist. As a result, as long as the global economy is in downturn and wars continue to break, the Crypto market will stay in crisis.

A lot of countries are in debt, and some of this countries are now actively peddling recessions. I read a news last night where the president of USA, said they will intervene if China invade Taiwan, this may result in another global war causing the market to crash futher.


How To Deal With This Crypto Market Crash


The reality is that the crypto market is known for its instability, but your ability to use it to your benefit is what makes you a good trader. Here are some suggestions for dealing with cryptocurrency market crash:

Conduct Thoroughly Research: Before buying or selling any coin, you should conduct thorough research about the team behind the project, their experience and previous projects, and whether or not they were successful. You must invest in a project with a use case and a detailed roadmap.

Always Take Profit: Since the crypto market does not always go as anticipated, it is best to approach asset management with a practical mindset. A 15% or 20% increase in asset value is a good profit. Anything less is reasonable, however it may not totally satisfy some people's avarice. Predicting that an asset will eventually approach it all-time high (ATH) may not be the best technique to profit and beat instability. Don't be greedy, always take profit even if it's little.

Patience: Patience is the key in addition to research, and this is especially true in the case of crypto. Take your time and don't rush. Know the reasons and all different causes for a price decrease before investing heavily in a crypto asset; don't just buy a coin because it dips; analyze the reason for the dips. For example, when the Luna price dropped to $1, many people saw it as a great buying opportunity and rushed in; nevertheless, the price continued to drop, and many people, including myself, lost money.

In a single line, patience and research are critical in determining the cause of a price drop or rise.

DCA (Dollar Cost Average): This is another great approach in buying or selling during this crypto crises, if after your research, you still doubt or having second thoughts on the coin you can simply dollar cost average in or out of the coin. This is simple buying the coin small small, this approach is one of the best way to deal with crypto crises and minimize loss.


Conclusion


Cryptocurrency crash are nothing new, and they're never fun. No one is pleased to watch their investment decrease to zero. The events that we are witnessing this year have occurred at numerous points throughout cryptocurrency history. Cryptocurrency has the advantage of falling like a ball and rebounding over time. As a result, expect a bull run, as this is how the Crypto ecosystem was created, with both bear and bull... All you have to do now is deal with the crash and carefully manage your investments.

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