Hello everyone, I welcome y'all to this week's contest which we will mainly be discussing the instability of the crypto market. This discussion is mainly because of the recent happenings In the crypto market as traders experience huge losses due to a heavy dump in crypto. So I will be discussing this instability base on the following questions. Without wasting any time, let's get started

As a trader, we should always know that the crypto market is always full of ups and downs because we can't experience a boom forever as well as we can't experience a doom forever. In a crypto market, the value of cryptocurrencies is usually determined by the law of demand and supply. In other words, when the cryptocurrency is in demand, it will turn to push the price of the coin up and when the cryptocurrency is in supply, it will turn to push the price of the coin down. This is further to say that at any time when demand exceeds supply, the price of the currency turns to increase. In a scenario, when supply exceeds demand, the price of the currency turns to decrease

Let's say this is exactly what happened last week. The crypto market was in a state where supply had exceeded demand which in turn caused the price of the cryptocurrency to experience a fall in its value.

This is where I will be taking you to the causes of this sudden fall in the price of cryptocurrencies because the crypto market experienced one of the craziest falls last week with LUNA being the most affected.

The high fall in cryptocurrency didn't exempt the mother coin which is Bitcoin. Despite this s coin hitting an ATH of about $66k last year, the coin also experience about a 37% decrease in its value last week as it dropped to about $26k.

Causes Of Downtrend In Cryptocurrencies

The first major cause is because of how the crypto market narrative has recently shifted from Risk-On to Risk-Off and this caused the liquidity of most coins to fall hence causing the central banks to start reducing the amount of speculation of the cryptocurrency incentive. As we speak now, cryptocurrency has been banned in some Central Banks, taking the CEMAC for example, which has banned cryptocurrency in all CEMAC zones including my country

The current situation of the Ukraine-Russian war has also had a nehurturrency most especially at the beginning of the war when Russia launched a surprise attack on Ukraine.

Another cause was when COVID-19 breakout and spread worldwide which further caused luck down in several countries. All this contributed to the negative impact of the cryptocurrency

Another major effect of the downtrend of cryptocurrency happened last year when the Chinese government officially notified the whole world that any cryptocurrency transactions in its country will be considered illegal hence implying that cryptocurrency is not a legal tender in their country

Will The Downtrend Continue?

Well, based on my certainty, I will say that the price will continue to fall for a while before it can start a major bullish movement. I have talked about the CEMAC bank which has banned cryptocurrencies in all its regions. This will cause cryptocurrency to continue experiencing a downtrend for a while before it can recover because we know cryptocurrency can't fall or rise forever. So it will pick up but not now.

Again, the Ukraine-Russian war is still ongoing and anything could still happen. If it turns out to escalate into 3rd world war, then there will be no way to sustain the value of crypto because it will fall. However, if the war is neutralized then I believe we will also experience a positive change in cryptocurrency

In cryptocurrency, trading volume is referred to the number of times a crypto asset can change over a given period or the number of crypto units that are being traded in the market at a specific period.

Now back to our question, despite the recent fall in price, we can still see that a good number of coins' trading volume was still able to be maintained. This explains why the accumulation of cryptocurrencies has led to the stability of trading volume since they were a lot of exchange activities on-chain by buyers and sellers when the coins were experiencing a fall in their values

From the screenshot above, we can see that when Bitcoin hit an ATH high of about $66k, it was trading at a volume of about $40B. The current price of BTC now is $29,959 and it's still trading at a volume of $36B. We see that despite the fall in BTC price to more than half its an all-time high, its trading volume hasn't changed that much and it's still trading at $36B which is not far from $40B. This is is to conclude that no matter the fall in the value of a cryptocurrency, it doesn't affect its trading volume that much which is quite impressive

Last week, the Terra LUNA was the main talking point as it experienced the highest downfall by dropping down to about 99% of its value which in turn caused complete disorder and confusion amongst traders because the coin dropped from about 120$ to 0.6$ within 2 days which is below a dollar despite it ranked amongst tope10 most recognize and valuable cryptocurrency. This drop in its value turn out to also drop drastically in its volume as the volume dropped from $40B to about $500M

Within the Terra Blockchain, LUNA is its native token and it's the 2nd best metaverse technology after MANA we know that it's metaverse that is taking over technology presently.

So I think the current instability and downfall of the Terra LUNA is simply because of the major downfall of the mother crypto coin Bitcoin and the major cause of this downfall is simply because of how the crypto market narratives have recently shifted from risk-On to risk-Off and this has suddenly caused liquidity of the LUNA token to fall drastically since huge investors are taking away their coins to less risky investments

However, the main reason why LUNA experience a drastic drop was mainly because the LUNA token had serious bad issues with that of the stable coin UST Terra dollar-pegged as it dropped to about $0.29 which in turn caused the LUNA price to drop to about 99.9% of its value

Will The Price Bounce Back?

After the major crash of the coin, Terra announced plans to burn about $1.4B $UST and then stake about 240M $LUNA so that the price can bounce back. I see this like magic and I'm eagerly waiting for this to bounce back

But I believe that $LUNA will bounce back because of its strong foundation as it is considered one of the most successful metaverse projects that have taken over technology.

There was a similar experience with Shiba Inu Coin as it experienced a drastic fall in its value just like this LUNA, but this coin recovered back despite it being just a maim coin. So what more of $LUNA that has the 2nd most successful metaverse technology. This is why I think this coin will recover itself and bounce back but it will have to take a long time to do so

So In conclusion, though it's almost impossible I think this coin will bounce back but it will take a long time to do so. Even when it bounces back, it won't reach its ATH of $119.18. So let's just sit and watch the outcome of the price

It was no surprise to me of seeing STEEM prices also drop. This is also a result of the drop in mother coin BTC. This drop-in STEEM price affected me very seriously as I watched how my account balance dropped to over $1k. I was so restless because since I joined this platform, I had never had a huge loss like this during a crisis.

The worst part of it was when I realized that I couldn't earn SBD again. I could earn only STEEM, SP, and TRX. This also worried me a lot and I was so confused and ask myself? Is this thing coming to an end??? It was thanks to Fredquantum who is a crypto professor that published an article talking about the reason why we Don't longer earn SBD. The main problem was because of the debt ratio between STEEM and SBD. The debt ratio between STEEM and SBD was greater than 10% which caused us to be receiving rewards only in STEEM, SP, and TRX.

I'm very happy that steemit Blockchain has a solid foundation, this is why the price has been able to bounce back and it's currently trading at 0.25 at the time of writing this post. This has also enabled us to start earning back in SBD. But I see the debt ratio between STEEM and SBD is between 9% and 10% now. This is why we are currently receiving rewards in both STEEM, SBD, SP and TRX

The instability of the crypto market shouldn't be a surprise issue to us traders because the value of cryptocurrency can't go going up or down forever. It will always keep moving up and down as a result of how volatile the market is.. so it's always volatility that depends on the market direction. As of now, despite the huge dump in cryptocurrencies, I still believe strongly that the crypto market will experience recovery and then bounce back

Thanks so much for your time everyone, I am inviting my fellow friends @tangwe-rene, @tenguhatanga, @wyzcekunited, @monjuapollonia, and @echamroland to come and participate in this amazing contest and tell us about their knowledge in the instability of the crypto market