October 5, 2022

CloudsBigData

Epicurean Science & Tech

Why Did The Crypto Crash This Week?

2 min read
crypto crash

The market cap of the crypto currency industry reached $3.1 trillion last November, but the recent plunge has left it worth just $1.3 trillion. Bitcoin’s price has fallen more than half from its high and the related coin luna has become practically worthless. Ethereum and tether, two of the most popular digital currencies, have each dropped more than 20% in just 24 hours. The crypto crash is also hitting the long-term investors, who are shrugging off the dramatic decline in their digital assets.

Some macroeconomic factors are also responsible for the recent drop in the price of bitcoin. For instance, rising interest rates may make savings accounts more attractive, and people may want to secure predictable returns instead of risking huge amounts of cash. The government’s actions may also contribute to investor pessimism and cause the market to crash. This article explores some of the common factors that contribute to crypto crashes. The reasons why the crypto market is at risk of falling further are complex, but a crash is likely if the market has hit a low point.

In the long run, a crypto crash will cause a significant amount of damage to the crypto market. While this will hurt many people and businesses, the impact on the entire industry will be small compared to its potential consequences. It’s possible that the market can recover after the trough. Its rapid rise largely reflects the fact that the crypto market is highly volatile. Even though it may not be able to recover fully from this crash, it’s important to remember that the crypto market has already undergone similar crashes.

The biggest lessons from this week’s crypto crash are that even the top altcoins may experience overnight losses and struggle to survive. Moreover, decentralized algorithm stablecoins need a better strategy in addressing this crisis. Centralized stablecoins often fall victim to insufficient cash reserves, making them appear helpless in times of crisis. Therefore, it’s crucial to develop a new strategy to avoid the worst of these situations.

In May, a stablecoin named terraUSD plunged in value, signaling a possible crypto bank run. This coin was intended to be a safe haven for investors. With a theoretical peg of one dollar to another, the cryptocurrency is supposed to hold its value regardless of market conditions. However, it has now been delisted by the Federal Reserve. So what are the implications of a crypto bank run? If it happens again, what will happen to it?

While most blue chip cryptocurrencies have lost more than half their value, others, like shitcoins, have also suffered heavy losses. The value of a stablecoin has fallen nearly 50% from its high point in the fall of last year. And the crash has wiped out most stablecoins, and many investors have lost more in them than in Bitcoin. So, which cryptocurrency will survive the crash? The answer may be in a stablecoin.

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