Crypto Academy Contest / S1W4 – Reviewing the Instability of the Crypto Market by @beckie96830
Welcome to week 4 of the steemit engagement challenge. I'm impressed by the inclusiveness initiative to encourage active participation and engagement of users, and the growth of the steem Blockchain.
The crypto academy community wants participants to discuss and review the current unstable crypto markets. In this post, I will be discussing my review of the current market conditions.
Question
Most of the cryptocurrency market is currently experiencing a sharp decline, especially in recent days. What do you think of this drop? State its causes and how long do you think it will continue in this downtrend?
The Bearish Crypto Markets
The year 2022 has been a bearish year so far for almost every cryptocurrency market since the all-time high prices of last year, with most crypto asset prices dropping more than 50% from the ATH price, this could be explained by investors in different ways as there are varying opinions as to why this steep decline is been experienced in the markets. Some choose to identify with the technical approach, and some focus more on the fundamental issues faced by most crypto-based companies and products, while others consider the two factors. In my opinion, the recent decline in the price of crypto assets resulted from the bearishness of the trend and regulation and sanction threats from the Securities and Exchange Commission (SEC).
Ideally, taking the technical approach (technical analysis) will indicate that the bearishness of the crypto markets resulted from the inability of major crypto assets like Bitcoin and Ethereum to break the previously recorded high prices or maintain the high prices above structure lows (major support levels), which led to a trend reversal (i.e from bullish to bearish trend).
Observing various crypto price charts, the bearishness is maintained with the continued formation of a bearish market structure. As observed from the price chart above, the price movement of Bitcoin (BTC) maintained a downtrend structure with the price breaking below previous support levels.
On the fundamental side of things, the crypto ecosystem over the years has been under pressure from central banks, governments, and regulatory bodies. But in recent months, the SEC, a US-based regulatory entity had prioritized the unchecked activities of crypto-related organizations and companies like exchanges. This is a power move to ensure that regulatory orders are imposed on Blockchain technology, and this defies one of the core foundations of Blockchain technology. An example of this is a recent publication on Bloomberg stating the intents and commentaries of SEC chairperson Gary Gensler.
In addition to this, a steady stream of fund withdrawals and transfers has been recorded on exchanges across major crypto assets. This is a move by investors to protect their capital against crypto price depreciation.
Will The Downtrend Continue?
In my opinion, I think the downtrend will continue for a while but nobody eventually says the exact time the downtrend will end. I believe the down movement of price will continue till prices of the crypto asset start to show signs of strong recovery. The price chart can indicate the end of the bearish trend by price movement breaking resistance levels and reaching new high prices. The crypto bounce back should also be backed by the interest of investors in reinvesting in crypto assets.
Question
Why doesn't this drop in the price of a few coins decrease their trading volume (eg: Bitcoin)? How will they deal with this market instability?
Crypto Trading Volume
The trading volume of a crypto asset is the estimated numeration of crypto asset exchange activities done by buyers and sellers within any specified period, this shows the rate of capital inflow or outflow from an exchange. The recent decline in the price of the crypto asset had no significant impact on the traded volume of major cryptocurrencies because of the continued exchange activities on-chain, where the majority of investors sell their held crypto assets for with fiat or stable coins equivalent. This helps the investors preserve the value of their invested capital.
In recent market conditions, the traded volume of assets on an exchange will be maintained as selling activities is been done on exchanges. According to coinmarketcap's official website, the traded volume of Bitcoin within the last 24 hours is roughly over $30.09B which is still within the $41.13B volume range around the all-time high price of $67k.
Volume in Recent Instability
Ideally, the trade volume in unstable market conditions generally tends to reduce due to a lack of directional bias and uncertainties associated with price depreciation, as investors either move money out of exchange accounts or wait for clear movement indication. In the case of Bitcoin, the daily trading volume is reduced and this can vary when compared to other crypto assets.
What is the relationship between the current instability and the downfall of the Terra ecosystem and its Luna currency? Do you think its price will bounce back? If so, tell us how and when?
Bearish Rally and Terra Ecosystem
Terra is a blockchain project that uses algorithms to sort for price stability between fiat currencies and digital currencies in the form of stablecoins. The bearish rally of cryptocurrencies affected almost all crypto including the stablecoins that have a pegged value of 1:1 to the US dollar. But there is an ounce of peculiarity with the case of Terra and its native stablecoin token TerraUSD (UST).
The CEO and co-founder of Terraform Labs Do Kwon have been battling lawsuits from the SEC on some of the organization's activities on their blockchain in correlation to the US Dollar. One of the recent lawsuits forced Terraform Lab to give the SEC access to their books which resulted in alleged rumors of the organization not having the quoted backing of 1:1 against the US dollar, and this led to several other lawsuits.
In my opinion, the legal issues between SEC and Terraform Labs and the bearishness of crypto markets jointly contributed to the flooring of the TerraUSD (UST) coin. Which lost millions of dollars for investors who were holding large positions on the coin.
Will it bounce back ??
In my opinion, I doubt the stablecoin can bounce back to the 1:1 pegged value against the dollar. I say this because the project already lost millions of dollars belonging to investors, it will require much more from the developers to prove and convince the SEC and investors that they are committed to the project as they initially intended. This would also require millions of dollars to be reinvested in the project to stabilize their books legally.
Question
Our Steem ecosystem, like most currencies, has been affected by this market downturn, has this caused you as a user some stress? Or are you still confident in this project? Give your opinion, specifying the arguments that support your review
Steem Ecosystem
The recent bearishness of the crypto ecosystem also affected the steem Blockchain. The Blockchain aims to encourage social engagement globally through writing and related media content while providing a wide library of open source information based on personal experiences and also providing a means to earn through cryptocurrency. The recent surge in prices of crypto resulted in a significant drop in the price of steem tokens (STEEM and SBD).
As a holder of Steem tokens on the Blockchain, it stressed me out a little as the value of my steem wallets dropped by a noticable percentage, But I'm very confident that steem Blockchain will withstand the bearish run and bounce back in due time.
Following the bearish turnout of Steem blockchain token prices (STEEM & SBD), the blockchain made a counter move to ensure the safety reach of the SBD token by stopping payout in SBD. I consider this a precautionary move to preserve the value of the SBD steem token against the rising dollar value.
Conclusion
The recent bearish rally across the crypto ecosystem is supported by many factors playing against the sustenance of cryptocurrencies. But I'm a firm believer that the markets will recover in due time. This might take a longer period as the depth of the current dip is unknown, but in general, I'm still possible about a bullish rally.
This draws the curtain on why I like steem Blockchain!
Steem on!
Thank you for reading!
Life is full of ups and downs, same fate applies to crypto, I believe there will be stabilization in the crypto space within the nect couple of days, let's just hope for the very best, thanks for this wonderful post.
You have made detailed explanation on the current happenings on the cryptocurrency market and its effect to Steemians.
Well, I believe that in no time we all will be back on our feet and all this current happening will be history.
Thank you for sharing. You can check out mine by clicking here
The current state of the crypto market has affected many investors in different ways. Thank you for reading
Usted y yo compartimos mucho la opinión pensamos casi igual saludo muñeca
Nice to know..
Thank you for reading
Thank you for publishing an article in the Crypto Academy community today. We have accessed your article and we present the result of the assessment below
Comments/Recommendation
Thank you for participating in this contest.
Total|8.5/10
You always write above our expectations, it is a very good analysis of the market. We know that this crash has affected many traders on different platforms. But I hope that the uptrend will take over the market soon.
Steem On and Keep Supporting.
We can only hope for a quicker recovery.
Thank you for stopping by.
You can stop by my post if you want hahaha, just joking don't mind me hehe.