Factors that contribute to cryptocurrency market dump

source

We know the cryptocurrency market is often subjected to dumps because one thing is for sure what goes up must come down really and that's really what we see here but then the market is one that we can't really predict and we can't really expect it to continue moving up without some downside which is often healthy even though sometimes they come rather unexpected to us.

The market will always do what it those, go up to take buyside liquidity and come down to take sellside liquidity, technical analyst will tell you that, but yet there are sometimes when there is a sudden dump in the market and it seems technically there is no answer to that especially in the cryptocurrency market that's why I intend to really discuss about the causes of dumps in the cryptocurrency market.

I mean they are some factors that lead to the market selling rather sharply and correcting massively and suddenly to the downside just as there is always a reason why the market goes up there are factors that contribute to the cryptocurrency market dump.

Things that leads to dumping in the cryptocurrency market

Well just as positive news could positively impact the cryptocurrency market the same goes for negative news, we knew the positive impact the Bitcoin Etf approval news had on Bitcoin and the rest of the marker in same way negative news tend to affect the market too and they have often be seen to lead to major dumps in the market.

News event like countries banning cryptocurrency especially major countries and if the reason is due to the bad environmental impact of cryptocurrency mining then such news could negatively impact the price of cryptocurrency market or sometimes like the case where Elon musk tweet would influence major hypes on doge in that same way if a popular figure also tweet or one who owns large amount of coin says he is going to sell off his holding it could lead to panic selling in the market.

Sometimes the negative news could come in the form of issues in security of the network which would be bad as investors would no longer trust the network maybe if a project is under attack from SEC or other regulatory issues, such news also will definitely affect the market rather drastically.

When the changes comes its rather unexpected it will really deal a major blow to the project, yes that's unexpected change in the regulatory framework of the said cryptocurrency asset and this thus leads to massive dump in the market as investors begins to pull out their money out of fear of the asset being sanctioned for life and them losing what little money they have, so yes sudden change in regulations is also another reason behind the dump of cryptocurrency market.

Unlike other mature asset like the stock market which has actually been around for long they cryptocurrency market is much like a newbie when compared to them is like a baby asset interms of age atleast now this means that is more prone to being subjected to manipulations by the big players who actually sometimes seek to manipulate their market with their large capitals for their own gain leaving others holding the bag.

Sometimes they do this by hyping a coin or even investing massively in them leading people to flock in with all they have and then they will sell off their large holdings massively leading to great dump in the market. So this is how the big players or whales manipulate the market.

Most times too there isn't really much to it is just the way of the market, because is only natural for the market to experience a little or slight retracement possibly after a big rally or surge upwards, those who got in early on the move may decide to bag some profits along the way and when this happens the market may sharply corrects depending on how much is taken out of it, this is the way of any financial asset traded even the traditional asset class, it could simply be buying and selling pressure and nothing more, no more logic don't look for it because it's not there, the market will always correct when people choose to sell off, it's just the way it is and that's often the reason behind the market dumping too, when buyers are satisfied with their profit they sell off to willing buyers or late comers who will be left to hold the bag.

Conclusion

Indeed these are some of the factors that could lead to dumps in the cryptocurrency market and true all project or coins could be subject to these things but while the weak project would possibly never recover the strong and fundamentally will also come back even stronger, coins that have great technology and good team constantly working on its development with active users can't really stay down for long despite the trick or challenges it face, so if you must invest, invest in good and strong fundamental project.