BITCOIN and other top cryptocurrencies dropped in price in December.
The world’s largest digital currency fell further along with the rest of the crypto market, which has lost a fifth of its trillion-dollar value.
The drop on December 4th wiped billions of dollars off the crypto market and comes less than a week after Bitcoin hit a record high of over $69,000.
The sharp drop wiped out about $300 billion in value from the total value electronic money market in just two days.
Is different Main players including ethereum, Binance coin, solana, cardano and Ripple’s XRP also fell and remained lower.
If you are thinking of investing, remember that it is a risky business and you are not guaranteed to make money.
You need to make sure you know the risks and potentially lose cash, and never invest in something you don’t understand.
Why did the cryptocurrency market crash?
Swing in electronic money followed a volatile period for financial markets, with soaring inflation forcing central banks to tighten their monetary policy.
The omicron variation has also resulted in risk aversion to concerns about what it could mean for the reopening of the global economy in the coming months.
Global stocks are down more than 4% from their November record, while havens like Treasuries are up.
The dollar has also been bullish against other flat currencies and cryptocurrencies lately, partly because interest rates are rising to reduce inflation.
Twitter’s finance boss Ned Segal also made negative comments about the cryptocurrency, which may have helped the market wobble.
He said investing cash in crypto assets “makes no sense” right now.
Yes Cryptocurrency natural cycle where people tend to sell off their assets when they hit record highs, as happened in late November.
When did the crypto market crash before?
As with any other currency, the market experiences it up and downand Bitcoin and cryptocurrencies are no exception.
Cryptocurrencies plunge because second time in a month in November, fell 6% overnight, wiping $7,000 (£5,200) off its value within hours.
There doesn’t seem to be any news leading to downside momentum, analysts said, and the moves appear to have been driven by profit-taking after the coin hit recent highs.
November’s crash was partly driven by long-term holders selling at highs to take home profits, according to blockchain data. That is typical after the price spike.
Five Risks When Investing in Cryptocurrencies
BELOW, we round up the five risks of investing in cryptocurrencies.
- Consumer protection: Some crypto-based high-return promotional investments may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptocurrencies, combined with the inherent difficulties in valuing cryptocurrencies reliably, puts consumers at high risk of loss.
- Product complexity: The complexity of some crypto-related products and services can make it difficult for consumers to understand the risk. There is no guarantee that cryptocurrency can be converted back to cash. Converting a cryptocurrency back into cash depends on the demand and supply available in the market.
- Fees and charges: Consumers should consider the impact of fees and charges on their investment, which may be more than the impact of fees and charges on managed investment products.
- Marketing materials: Companies can overstate product returns or minimize the risk involved.
The drop wiped out hundreds of billions of people globally cryptocurrency market.
This fall is predicted to be caused by Bitcoin hitting an all-time high when the value reached nearly $67,000.
The value of cryptocurrencies plummeted on scary “death of life” phase after China extended its crackdown on cryptocurrency mining.
The country accounted for more than 60% of mining and trading at the time.
Turkey’s central bank announced it will ban cryptocurrencies For purchases and power outages in China’s Xinjiang region, which provides a lot of Bitcoin mining, it means the coin will suffer more.
It started to rise after several mainstream businesses said they would allow customers to pay with more well-known virtual currencies, such as PayPal.
Several cryptocurrencies such as Bitcoin, Ether, and Dogecoin fell more than 10% on the morning of February 23.
On Saturday, February 20, Musk may have inadvertently sparked the crypto plunge with a tweet claiming that Bitcoin and Ether prices “look high.”
Crypto Crash 2018
After an unprecedented boom in 2017, the Bitcoin price dropped around 65% in January and February 2018, in one of the biggest crashes in crypto history.
In September 2018, cryptocurrencies collapsed 80% from their peak, making the crash worse than the 78% collapse of the Dot-com bubble.
By November 26, Bitcoin was also down more than 80% from its peak, losing almost a third of its value in the last week.
The bubble is said to burst by a number of factors, including concerns around the high risk of theft Cryptocurrencies and long-term holders sell at highs to take home profits.
What are the risks of investing in cryptocurrencies?
Investing in cryptocurrency is essentially gambling and there is no guarantee that you will see what you pay increase in value.
Cryptocurrencies are VERY high-risk and a speculative investment, with a limited track record and no underlying value.
There is also no guarantee that you will be able to convert crypto assets back to cash, as it may depend on demand and supply in the current market.
Cryptocurrency companies are not regulated the way other financial firms are, which means you won’t have any protections if things go wrong.
Experts advise that you should never invest in something if you don’t understand it well.
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https://www.thesun.co.uk/money/16937984/why-has-the-cryptocurrency-market-crashed/ Why did the cryptocurrency market crash?