Steemit Crypto Academy Contest / S1W4 – Reviewing the Instability of the Crypto Market by @mohammadfaisal | 100% Power Up
Hello everyone! I hope you will be well and good. I am going to discuss the downtrend and decline in the crypto market.
As we know the crypto market is highly volatile. And we cannot predict correctly that this time it is going up and next moment what will happen. As currently we are seeing that the crypto market is facing a sharp decline.
There are many reasons for this decline in the crypto market. One of the biggest reasons in my opinion is the war between Russia and Ukraine, yes you have read it right that it is one of the most important reasons for the crypto market decline. As it is clear that before the war the crypto market was stabling itself and trying to gain momentum but when the war started the crypto market again lost its momentum and it was declined.
Because when there is any war or any other severe situation like this then the crypto investors suddenly sell their assets and start withdrawing their money. Because these whales know that anything can happen during this war. And mostly investors from the affected countries start selling their assets because due to war the trading can be closed in their countries as it has happened recently.
Increasing rate of inflation is another important reason for the crypto decline. As we know that the economy of every country is going down and down day by day. In this way the inflation rate is increasing and the crypto investors are decreasing because they are just holding and saving their money to cope with the high inflation rate.
High Interest Rates are also included in the crash of the market. As we know that mostly people get loans and then they make investment or do some some business to earn profits and after that they return the loan along with the interest. Similarly some people get loans from the banks to invest in crypto but due to high and increased interest rates they are avoiding loans and consequently they are not investing in crypto due to which crypto is not getting high volume and buying pressure.
Tapering is another factor of the crypto crash. Due to tapering the supply and liquidity of the fiat currency is decreased in the ecosystem. As the fiat currency is decreased then crypto also crashes and meanwhile us dollar gain high price. As people have need of us dollars to buy crypto and other things but due to tapering the us dollars are sucked from the market and the price of the cryptocurrencies fall down.
One time it happened in 2018 that crypto crash happened and it crashed complete market badly. As cryptocurrency boomed in 2017 and BTC did it as well. But after this great bullish it crashed in 2018 and bitcoin the mother of all cryptocurrencies fell down at extreme rate and fell almost 65% in just one month.
It is unpredictable how long crypto crash will continue. The crypto market is always unpredictable due to the high volatility. But generally in my opinion the market will continue to fall until the war of Russia and Ukraine continues. Because fear is everywhere and people are not buying cryptocurrency. As the bullish trend happens due to the high volume and highest buying pressure. So when the war will end completely then the probability of bullish trend will increase.
The economy of every country is also low and the cryptocurrencies will continue to fall down until the economy of the world will become stable. Because the economy of the world is stable then they will invest and trust in crypto and then due to the increase in the buying pressure cryptocurrency will stop falling down. So crypto crashes will last until the economy of the whole world becomes stable.
When the liquidity of the fiat currency will increase and tapering will stop then the fall in the crypto market will stop. Moreover the depegging of the TerraUSD (UST) has created the fear and has put pressure on the crypto market to break down. And due to this depegging many people have lost their huge investments and savings who were saving in the UST. But it is also a sure thing that crypto will never crash to zero. So crypto crash can last until liquidity of the fiat currency increases.
Now as we know that crypto has already been crashed too much so in my opinion if now there is no any FUD news or any other hacking or attacking new as happened with the UST, then the market will rise and this downtrend will stop.
In order to answer this question firstly I want to explain the term volume in crypto scope. Basically the total volume of any cryptocurrency is sum of all the trades which are taking place. It includes the sum of the selling as well as buying trades .
It is obvious as we have seen that the trading volume of the cryptocurrencies like Bitcoin and Ethereum is not decreasing. As I have taken a snap of the bitcoin volume and you can see that it has increased 8.2% rather to decline. Because there are always two sides of each picture. Similarly in the crypto market there are two types of people who are currently in the market.
As some person are selling the cryptocurrencies due to the fear of volatility and crash but on the other hands there are also people who ar buying the same cryptocurrencies taking the advantage of the low prices and then holding them and waiting to go to the moon.
So this is the reason that the volume of cryptocurrencies is not decreasing but remaining at that rate.
Nowadays Luna ecosystem is trending everywhere due to the crash of Luna as well as UST, as the blockchain was halted.
Terra USD (UST) is a stable coin of the terra blockchain whose worth was pegged to the USD with the worth of $1 and they have Luna coin as well in order to maintain its value. If we burn Luna coin of worth $1 then we can get 1 UST.
But after the wormhole hack the UST was unable to stable its value to the USD and it's price was falling down. And due to which people started selling it as well as Luna coin and the Luna coin and the UST was dumped hardly.
Luna lose its value and many people lost their investments in the Luna coin. And due to this inclined and fall in the Luna coin it's supply increased from 1 billion coins to 6 trillion in just a few days which further lead Luna coin to fall down.
As I have discussed and mentioned it earlier that the supply of the Luna coin has increased from 1 billion coins to 6 trillion which is the most worst thing of the Luna coin. Due to this huge supply it is looking impossible for the Luna coin to bounce back to its previous level. Even for the Luna coin and UST it is impossible to bounce back to even $1.
The reason and arguements for the Luna coin which I am seeing are that as the investors have already lost s lot of money in this project. And they have lose the trust of investors. The people are not mad that they trust in them again o loose their money untill they don't burn the Luna coins.
And for burning the Luna coins huge funds are required and the company is short of funds and LUNs cannot be burnt. As far as the supply of the Luna will not reduce Luna cannot grow and rise.
So let me show you if we expect Luna to come at the price of $1 then how much marketcap it must have to go at that price level.
As you can see in the above picture that the current total supply of Luna coin is 6,907,366,873,062 Luna and if it reach to $1 then it's marketcap must be:
$1 × 6,907,366,873,062 = $6,907,366,873,062
You can see this marketcap and then ponder over the total marketcap of all the coins which is $1.24 trillion. But Luna coin only itself required marketcap of $6.9+ trillion which is hard to achieve. If I say that it is impossible to achieve for Luna then it will not be wrong.
As nowadays crypto crash happening and all the coins are affecting by this crash. Because most of the cryptocurrencies follow the trend of the mother of the cryptocurrencies Bitcoin. And similarly steem also follows the market trend and it is also going down along with the other market.
No doubt if you are working in a company and that company is paying you and you are enjoying that salary. But due to some circumstances the worth of the same salary decreases then you will become worried and stressful because you are not getting your deserving value. So it is obvious that every steem user including me is stressed due to fall in the steem coin price. Because it is universal rule that when the salary or the working output becomes low then we become worried.
But as steem is a cryptocurrency so I am still confident that soon it will rise and will give more benefit to its users. And it is a great chance for the investors to invest in the steem coin as it is trading at low price currently.
As you can see that at the time of writing steem coin is trading at its lowest price of $0.2392 and I can invest here as well as other investors to get huge profits in near future. Because it is obvious that steem is a great project and one day it's value will rise soon.
So I am no more stressed because I believe in the steem project and it will be riding soon.
Conclusion
Crypto crash is going on due to the high inflation rates, affected economy of each country and due to the low trust in crypto and other thing is tapering and low liquidity of the fiat currency.
And as the supply of Luna has increased greatly from its initial supply as initial supply was 1 billion Luna coins but currently it's supply is almost 6.95+ trillions Luna coin. So for Luna it is impossible to rise and to achieve at least $1.
And crypto crash will stop soon and it cannot go to zero. And it may be stressful for the steem user but I am confident that it will soon go up along with the market.
Great work in cryptocurrency, your post is very informative.
I hope you continue your work in cryptocurrency.
Thanks dear for having a look and appreciating my work.