The cryptocurrency market peaked in November last year with a market capitalization of $2.9 trillion. But in just 10 days in June, Bitcoin has lost 55% of its value, hovering near $20,000. Most other digital currencies are facing declines of 60% to 90%. The global value of cryptocurrencies plummeted to $800 million, less than a third of its all-time high.
Bitcoin and other similar assets have their own dynamics and undergo regular corrections due to internal reasons. However, digital currencies are increasingly interconnected with global investment markets and directly influenced by global economic events. The recent devaluations have been far-reaching and have affected equity investment in general.
3 main reasons why cryptocurrencies fell
1. Macroeconomic scenario
The world economy is going through a tough time right now. Rising commodity prices and imbalances in supply and demand after the pandemic have accelerated inflation. “These things have caused the government to curb consumption and raise interest rates to fight inflation,” said one expert.
The US central bank, the US Federal Reserve, raised interest rates by 0.75% on June 15th. This is his biggest rise since 1994. As a result, investors tend to abandon equity volatility in favor of more conservative investments such as public debt. and the crypto market.
2. Crisis of trust
In addition to the factors affecting investment, digital currencies suffer from a crisis of confidence. As analyzed by leading cryptocurrency market advisors, cryptocurrencies are highly fragmented and have regulatory issues. A global crisis and a crisis of trust feed on each other.
Discussions about the legal framework for cryptocurrencies in the United States and other countries tend to alleviate this fear, as formalization recognizes the importance of this area. Regulation should attract major players such as institutional investors and increase the stability of digital assets.
3. Fraud Coin
From the looks of it, these coins are being sold under promises that are intended to be false.Scammer launches her ICO, sells tokens and then
run away with profits. They usually have legit-looking whitepapers and know how to sell tokens to generate hype. Inexperienced traders and sometimes even those who have been involved in the cryptocurrency market for a long time fall for scams and invest in these false promises.
Additionally, many ICOs operate anonymously and even require crypto donations, making it nearly impossible to take legal action against these scammers. This not only causes investors to suffer financial losses, but also loses hope for other cryptocurrency investments.
Other scams include false hype. This leads to false sales and increased prices. Investors may see a sudden rise and feel that it is a good investment, but ultimately fall for the “fake bull market” scam.
Will any cryptocurrencies fail in 2021?
The answer is yes! A very clear example of this can be found in the cryptocurrency Luna. Cryptocurrency Luna has lost 99.98% of its value in the last 7 days. The digital currency rose from $86.04 on May 5 to $0.33 on Thursday, according to data from Coinbase and Coindesk. Experts attributed the drop to stablecoins, cryptocurrencies tied to some kind of asset.
Luna is a cryptocurrency that runs on the Terra blockchain. Created by a group of Korean developers. Its purpose was to act as the engine behind the $1 worth of stablecoin UST.
In other words, once UST crossed US$1, a certain amount of Luna was burned to equalize its value. Conversely, when the price fell, large amounts of Luna were issued to try to boost the value of UST.
What happened to Luna was a failure of the algorithm trying to maintain parity. A large amount of Luna was created as various people tried to sell cryptocurrencies. Thus, prices plummeted due to the glut of digital currencies available on the market.
“We haven’t seen anything like it in the cryptocurrency market for years. This was one of the biggest reasons blockchain failed,” said expert Michael Saylor.
Another major issue, according to Thaler’s assessment, is that the Luna crisis has brought uncertainty to the cryptocurrency market as investors allocate capital to stablecoins.
When will cryptocurrencies rise again?
In an interview with CNBC, Coinbase CEO Brian Armstrong said he believes the crypto winter could last until 2023. During the interview, Armstrong spoke about the current state of the cryptocurrency market and hopes the situation will not change anytime soon. The billionaire has revealed that he expects the cryptocurrency price to remain on the move for a long time before reversing the trend and starting to recover the value lost in recent months.
Armstrong said there is no reason for Coinbase to worry about a permanent drop, given that this moment is a cycle, like many others before it, and that it will eventually happen. pointing out. In fact, the cryptocurrency market has already witnessed such cycles at least four times. The truth is that almost all investors are anticipating these bearish moments. Things got a little more complicated with the bankruptcies of Terra Luna and other key companies that we talked about in the previous paragraph. This caused investors to lose confidence and still worries everyone.

How to make a good cryptocurrency?
A good cryptocurrency should offer technology that could solve a problem or move a market. For example, Bitcoin blockchainThe Ethereum network also allows new cryptocurrencies to be created using its technology.
The more important a currency’s features are, the more people will use it and the greater the long-term earning potential. So please understand the use of cryptocurrency to understand if it is serious or just a joke like meme coin.
One of the greatest examples of a cryptocurrency without a specific function is Dogecoin, which is based on a famous internet meme featuring the Japanese Shiba Inu. After being quoted by billionaire Elon Musk, she became popular and gained a high market value.
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