STEEMIT CRYPTO ACADEMY CONTEST | S1W4 | REVIEWING THE INSTABILITY OF THE CRYPTO MARKET by @feyol55
Good day everyone, I want to specially welcome you all to the week 4 of this contest, it's been a great and amazing journey thus far. Special thanks to the crypto academy admin for bringing up this interesting topic because it's so important we discuss this at this point in time. Kindly follow me as I take a review on the current instability of the crypto market.
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Cryptocurrency as we all know being a volatile market is expected to fluctuate and prices move erratically. The rule that says whatever goes up must come down also applies to crypto. One moment, there is boom ! and the next moment there is doom ! This is a typical characteristics of the crypto market. The recent turbulence and drastic fall in cryptocurrencies value was somehow expected because when you put a lot of factors into consideration, you will definitely understand that the recent decline was just inevitable.
Firstly, aftermath the covid lockdown, there were serious economic pressure around the globe and this had an effect on the general state of the crypto market. Though subsequently, the market tried to stabilize after the covid pandemic era but China dealt a huge blow again after it clamped down on crypto market and placed a restriction on cryptocurrencies usage in the country. The Chinese government further announced that all transactions of the cryptocurrencies henceforth remain illegal. To further worsen the situation, the current Russia's invasion of Ukraine didn't help matters as the fight between the two nations had some negative effect on the general situation of the crypto market.
WILL THIS DOWNTREND CONTINUE
Though many crypto analyst believe that Bitcoin could still rise above $100,000, remember Bitcoin drives majority of the altcoins in the market and it determines their trend. There are chances the general downtrend in the market might still continue for sometime as a result of the continued fight against covid-19, then the regulatory actions set by the U.S government could slow the recovery phase of the digital coin market. The downtrend will definitely continue but won't last forever, I expect a correction soon and there's a slight chance Bitcoin might still go back near it ATH before the year runs out.
Firstly, we need to understand what 'trading volume' is. Trading volume can be defined as the measure of how a crypto coin has been traded (buying and selling) within a specified duration. Looking at the current situation of the market in correlation with the trading volume of these coins, it is true that most of these coins were still able to maintain a relative good trading volume.
I think the stability in the trading volume can be attributed to the fact that more investors are putting in money into the crypto market now to buy large portfolio of these coins when they are in dip. Analyst have suggested that, the dip period when most cryptos are down is the best moment for anyone to accumulate this coins, so I think the accumulation of the crypto coins has resulted in the stability in the trading volume of the cryptocurrencies in the market.
Let's take a look at the image above for example, when Ethereum was trading at an All Time High of $4,298.31, it recorded a trading volume of about $20.6 few months after (may precisely) after loosing half of it value, it still recorded an average daily volume of $21B which is quite impressive. These shows that the fall in value or price of a coin doesn't really translate to drop in the trading volume.
It's no news again that one of the most promising cryptocurrency LUNA was dealt a huge blow amidst the general decline in the crypto ecosystem. I think the major reason why there was a general downfall in the price of crypto coins including bitcoin which fell below $30,000 is due to the fact that more investors are now moving away from cryptocurrency and putting more money in less risky investments because of the effect of the current global inflation. Then LUNA was the biggest casualty of the crypto meltdown loosing about 99.9% of its value. It price fell from about $12 to a ridiculous $0.003. I believe LUNA actually crashed because Terra couldn't sustain its peg to the dollar as a result of rising concern over the looming interest - rate hike by the federal reserve. The UST began to fall and in trying to save the situation, more LUNA was pumped into the system to try and recorrect the system but unfortunately while doing this, the LUNA value was tumbling downwards.
CAN LUNA RECOVER ?
It's not impossible but then it's quite uncertain we would see LUNA go back up and recover.
The founder of Terra Do Kwon has announced last week that a recovery plan for $UST will be announced shortly and it has been said that Terra will bounce back in grand style and it will be a sight to behold. No doubts, in the crypto industry, the Terra blockchain remains one of the most vibrant and solid projects you can come across. Time will actually tell if we are going to ever see one of the greatest comeback in the history of the crypto industry. But I personally believe TerraLuna will stabilize in a long while and within the next 1 year, LUNA could touch $1 again.
To be sincere, I felt the impact of the crypto market downturn emotionally and psychologically. Last week turn out of event in the crypto space destabilize me a little bit, I was really scared of loosing all my investments as I watch the bears take full control of the market and eveywhere was just 'RED'. STEEM my darling coin was also affected, for the first time since I joined Steemit, I saw Steem dragged down below $0.20. I strongly believe the Steem blockchain is actually strong enough to withstand the crypto market downturn so I'm still very much confident of this project. It has been speculated by crypto analysts that by the end of 2023, Steem price is expected to touch $0.384.
Then I believe the latest move by the Steem team to pause payout in SBD and instead use STEEM is a good move, it will help save the coin.
Like I did say at the beginning of this post, nothing last forever, even the life we live is full of ups and downs. Same fate applies to the crypto market, it's volatility makes it very unpredictable, it could go high in a moment and the next minute, it's down. I believe the crypto winter will soon pass away. Let's all endure the moment and just hope for the best to come. The bulls will be back stronger in a shortwhile. It's just a matter of time. Despite the little shake, I'm still very optimistic that there are still great days ahead in the crypto ecosystem.