Steemit Crypto Academy Contest / S1W4 – Reviewing the Instability of the Crypto Market
Hi there everyone! The topic is rather trending on all social media platforms these days and why shouldn’t it? Afterall, Crypto is a market with a market cap over $1 Trillion. We will do a small debate on it as well.
Firstly let’s talk about the sharp decline in the market in recent days. Among various reasons being given on the web, one which is close to being accurate is, cryptocurrency is still in its early stages, there are tons of developments to be made in this new technology to make it invincible, and immune to any defects. And since it is an emerging market which has gained rapid popularity, it is still diminutive compared to the traditional currency markets or commodity markets.
Another way of saying that, individuals holding large amounts of coins can influence the market. Another reason is that people trade on speculations rapidly. They bet on the price to go up and place buy orders in a bulk quantity and when their speculations turn out to be wrong they quickly withdraw their funds, this frequent influx and outflux causes high volatility in the crypto markets.
Now coming to why this drop hasn’t caused any downtrends to the trading volume of some coins, Bitcoin specifically. Well probably because it is the oldest or the most mature coin in the emerging market and amatuer traders consider it the gold of the crypto market. So they don’t refrain from trading Bitcoin in the market.
Talking about relating this sharp decline with the Terra Luna. Well, to describe it I would put things like this. Terra LUNA is a stable coin, LUNA being the crypto coin for the Terra network. So if the TerraUSD destabilizes, LUNA is burnt or sold in simple terms to stabilize TerraUSD and keep the price pegged to $1 all the time. Now of course an algorithm is designed and used to make this all happen. Now why did LUNA crash? Probably because TerraUSD lost its peg to the dollar, which led the holders of LUNA selling it all at once and withdrawing their funds, further drowning its value in the market. The coin has the potential to recover but the situation is quite uncertain as buyers have lost confidence in it.
Since we are talking about coins, I don’t want to be left behind in telling which one I like. Ethereum is one of my personal favorites before a lot of other coins. Why because the platform can be used to make various applications by developers, and the transaction rate is faster than Bitcoin.