Steemit Crypto Academy Contest / S1W4 – Reviewing the Instability of the Crypto Market by @mccoy02

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The crypto market has presented itself decades ago with the inception of BTC we had our first decentralized digital currency that provides users with a seamless peer2peer transactions without intermediate barriers, since then it has faced countless opposition from different institutions and regulatory agencies across the globe the quest to bring down decentralization has been the aim of some opposing users till date.

We have seen multiple market crashes in the crypto space in 2018 we had the biggest market crash we saw an 80% decline in crypto market cap with bitcoin falling below 80% as well this was considered a crypto market bubble prominent investors the likes of Warren Buffett did criticize Bitcoin as a delusional mirage asset.

What we have always noted about every market is that history will always repeat itself life is a cycle so the crypto market crash/dump is what makes the market fun for those who understood the market very well.

What I think about the recent market crash/drop

1. It's a normal cyclic cycle; yes those who keep records of market history will understand it's very much okay for the market to experience a quick sudden drop, we have a bull market which also has presented an opportunity for the bear market as well.
   In December 2017 BTC reached an all-time high of $19,783, on 22 December 2017 it fell below $11,000 a 45% drop, in 2021 we saw an all-time high above $60,000, and in 2022 a fall below 27,000 50% drop in price.
   In essence, we are to understand crashes/drops are part of the market cycle.

2. Presents investors with opportunities; there is always a saying buy the dip and a market crash presents ample opportunity for investors to take advantage of the sudden fall with the recent bitcoin dip those who can grab the opportunity to buy from the bottom can make a good profit when price bounce back to normal.

3. There is always a calm after the storm; this part is important and every investor is fully aware no market phase lasts forever which means after the market decline in price will pick up again with positive energy.

There are a lot of contributing factors that could lead to the market crash which include, FOMO, regulatory news, fear, and greed, below are some of the possible causes behind the market decline.

Inflation hike Fed hike in the inflation rate has affected both the crypto and traditional market there has been market instability in both goods and commodities also the unrelenting Russia and Ukraine war is another contributing factor, panic selling which has increased fear between investors leading to quick market sell-off and finally we saw the stable coin de-pegging UST falling below $1 which affected the price of luna falling below $1 from an all-time high of over $100.

The market decline will not continue in a downtrend as there will always be price bounce and recovery this decline can last for months but as always market cycle repeats itself so in no time we will see good price recovery.

In all trading assets trading volume gives a strong price momentum thereby giving strength to the price movement of such trading pair which means a price increase indicates an increase in volume while reversing in price indicates a decrease in volume.

Why few coins like BTC don't fall into this pattern of drop in price with an increase in volume is because of negative news affecting the crypto market investors are more interested in stabilizing the price of BTC by averaging the buying power than the price value which is been affected by negative market news, therefore daily we see the volume of traded BTC increases while the price of the asset has been dropping, as a result, fear incited by market news. Although more trading volume by traders is increasing the price has continue to decline due to market fear.

Terra UST decentralized reserve

source

Terra team was the first blockchain network to introduce a decentralized backed stable coin using BTC as a reserve, the plan did flourish on a bullish market as LUNA price made an all-time high with the rise in BTC the negative part was if BTC should fall in price this will affect the price of both LUNA and UST which the team was aware of. UST started losing its $1 stable price peg as BTC dump further the inability for UST to hold it peg price influenced LUNA price which leads to massive sell-off from investors due to panic of losing all their funds, terra ecosystem fail because the project team failed to analyze the pros and cons of using a decentralized backed reserve which affected the peg price of UST as a stable coin.

What needs to be done for the price to bounce back

There are lots of pressing issues the terra community needs to address for the price to bounce back the excessive supply of terra token need to be eliminated/burn there are over 6 trillion units of terra token circulating at the moment, which need to be burned through a buyback mechanism if this is done we can start considering price stability.

Plans are rolled out on how to revive the terra ecosystem currently the team is working on forking the terra blockchain to a new token if done there are probably we can see good price improvement when can we see a price rebound all depends on how the team plan work out with the new fork.

steem making price blow 0.16 screenshot from binance trading app

Steem token nosedive as a smallholder of the token I was affected no good investor would love to see his portfolio fall below 50% with the recent steemit token price fall I wasn't happy with how steem token reacted to the recent BTC crash which probably means if BTC should fall further downward we can still have our steem portfolio greatly affected.

Taking about confidence in steem as I've stated earlier market cycles happen in all crypto markets what we did witness with steem was also part of the market and those with enough resources did take advantage of the dip and bought below $0.2 which is a good trading strategy for good investment I am confident about the project and am sure price will get back to normal once the market is up.

Buy the dip

The current price of steem is still a good buying zone since a bear market will not always last forever we could start seeing price appreciation steem has always been a good investment token in the crypto space which means if an investor can buy more steem now double reward can be made in the future.

Conclusion

Crypto and all other investments involve certain risk the risk of uncertainty is what is involved with crypto adequate and proper research needs to be carried out always before using real capital to invest in any project market ups and downs are what makes a market fun a market that moves in only one direction can be boring with high uncertainty involve and finally always use what you can afford when investing thanks.