Why Crypto is Now in a Bear Market.
Cryptocurrencies have been in a bear market for over a year now, and it's still unclear when this will end. Below we've outlined some of the key forces that have caused this decline from its peak value.
There are many forces that have helped Bitcoin, Ethereum and other cryptos to be in the bear market now.
The bear market has been caused by many forces, some of which are:
The rise of crypto asset prices was inefficient and irrational. In a recent blog post by CryptoCompare, they argue that the run-up in prices was driven by “a combination of hype, wishful thinking, and fear” rather than sound fundamentals or solid business models.
Crypto holders panicked when they saw their assets decline by ~70% from their peak in December 2018. They sold out of their positions at these depressed prices only to be quickly replaced with new investors looking for a bargain on a different coin (or two). This led to further selling pressure as long-term holders got nervous about keeping up with demand for other assets like BTC or ETH which were rising rapidly at this time.
The rise of crypto asset prices was inefficient and irrational.
Crypto asset prices have been driven by speculation and hype. Crypto assets are not backed by anything tangible, so they can’t be considered as a traditional asset class. Also, it’s not clear how many people are actually using them for their intended purpose (i.e., transactions).
The rise of crypto asset prices was irrational because it occurred without any economic justification and in an inefficient way: speculators were buying into bitcoin with the expectation that its value would increase over time; meanwhile, users were hoping for lower transaction fees on their transactions through the use of cryptocurrencies such as XRP or ETH instead of fiat currencies like USD$.
Crypto holders panicked and sold out of their positions when the price declined by ~70% from its peak.
When you see a price decline of 70%, you should be worried. Cryptocurrency markets are volatile, and panic selling is a natural part of the market cycle—if you've been around crypto for long enough, you'll know that this is normal.
If your goal is to make money with cryptocurrency, then it's important to keep an eye on what's going on in the market at all times. Some traders will try to time their buys and sells based on news about specific coins or tokens (or even individual ICOs), but these strategies can often lead them astray if they don't understand how these things work before jumping into action too soon after something happens (like when Bitcoin dropped from $20k).
Most crypto users use Tether to hold their funds.
In the world of cryptocurrency, a stablecoin is any digital asset pegged to another real-world asset.
It’s a popular tool for traders because it allows them to avoid the volatility of cryptocurrencies. Tether is one such stable coin and it has become widely used by crypto traders because it allows them easy access to US dollars with which they can buy or sell their holdings.
Tether isn’t backed by any government or central bank; instead, it uses its own reserves (which are created from fractional reserve banking) to conduct transactions on behalf of users.
Cryptocurrencies are also not a store of value because they do not represent anything tangible. If you hold USD$ in your bank account, you can use it to pay for things like food and shelter. But if you have bitcoin or another cryptocurrency, what can you buy with it? Because there are no fundamental assets behind bitcoin or any other cryptocurrency, their prices tend to be volatile; this makes them unsuitable as an investment vehicle unless one is willing to take on significant risks idea behind Tether is that it’s a stable currency that can be used in place of US dollars. The problem is, the Tether company has never published an audit or proof that its reserves exist..
Smaller retail traders, which are less informed, helped to drive the price crash.
For the most part, retail traders are less informed about the market than institutional investors. They have limited experience and knowledge of cryptocurrencies and blockchain technology. When they see a large sell-off in a cryptocurrency exchange, they may panic sell as well.
Institutional investors hold a large amount of capital on behalf of clients because they understand how to use this money wisely and can make profits from it over time by investing in different assets like stocks or bonds which pay dividends when they mature (grow old). These funds are usually managed by professional financial advisers who work closely with their client's needs throughout their lifetimes—from birth right through adulthood until death happens!
Institutional investors are more likely to hold a large portion of their portfolios in alternative cryptocurrencies. They also have deep pockets and can afford to buy large amounts of cryptocurrency when it is low-priced or when it is about to rise again after a crash.
The historical volatility of cryptocurrencies is still much higher than normal stock market volatility.
- The historical volatility of cryptocurrencies is still much higher than normal stock market volatility.
- Stock market volatility is lower than crypto volatility.
- Stock market volatility is more predictable than crypto volatility, and will continue to be so as time goes on.
- Cryptocurrency is extremely volatile and will continue to be so for the foreseeable future. This means that you should be prepared for any price changes, even if they are in the opposite direction of what you expect.
This can cause many potential investors to avoid investing in crypto assets due to fear of losing their capital.
The fear of losing money can cause many potential investors to avoid investing in crypto assets due to fear of losing their capital. This can result in poor investment decisions and panic selling, which further drives down the price even further.
If you are new to cryptocurrency and are wondering whether or not it’s worth investing your time and resources into, there are some things you should consider before making any decision:
Try to understand the technology behind cryptocurrency and how it works.
-Research different coins and find out which ones are worth investing in based on their potential for growth.
-Diversify your portfolio by investing in several different cryptocurrencies.
These two weaknesses alone were enough to bring cryptocurrencies down.
The two weaknesses of crypto assets were the high volatility and the lack of regulation. These two weaknesses alone were enough to bring cryptocurrencies down. Crypto bear markets are normal and will eventually end, but it’s hard to know when exactly it will end.
It’s important to be patient and stick with your investment plan. You will eventually reap the rewards of your patience, but only if you stay invested throughout all the ups and downs.
As a rule of thumb, it’s best to avoid trading your crypto assets during bear markets. The most important thing is to stay invested and keep your goals in mind.
A crypto bear market is a natural part of the market cycle and will eventually end, but it's hard to know when exactly it will end - so don't get caught up in trying to time the market!
A bear market is a natural part of the market cycle, and it will eventually end. However, it's hard to tell exactly when this will happen - so don't get caught up in trying to time the market!
Bear markets can last for months or years, depending on how far down they go before rebounding. As long as you're patient and wait for prices to reach the bottom before buying again (and if you want to invest), then there's no need for panic selling when things look bleak; just buy more at lower prices later on down the road when things improve again.
These forces combined led us into a crypto bear market and also cause this decline from its peak value.
The forces that have been working against crypto in recent months have combined to create a bear market. This is a natural part of the market cycle, and will eventually lead us back up out of this decline.
However, it's hard to know when exactly that will happen—the best we can do is take our current position on what's happening right now with crypto markets and see how things play out over time.
But let's take a step back, and look at the big picture. Crypto has been around for less than 10 years, and over that time it has shown incredible potential as a new asset class.
Conclusion.
The bear market is bad news for all crypto holders, but it doesn't mean that you should sell your holdings before they recover. We believe we can still see a rebound at some point in the future and this is why we're not yet giving up on cryptocurrencies completely.