Investors panic as crypto market loses over $1 trillion [Experts’ Insights] – TechEconomy.ng

Currently, the digital currency market is in panic after many investors were caught off guard and saw some of their crypto assets wiped out within 24 hours of a massive drop in value on Monday.

No cryptocurrency investor will soon forget how the market plummeted on Monday, May 9th, 2022. Out of over 10,000 digital currencies in the world, major coins like Bitcoin, Ethereum, etc. lost over $1 trillion in value, according to Binance’s TechEconomy, the largest crypto exchange platform, on Monday.

Cryptocurrencies, which are still in their very early stages, are volatile with no intrinsic value and are primarily driven based on market speculation and narrative. The overall market including stocks noticed the high correlation between bitcoin prices and the general stock markets.

Bitcoin, which is known as the leading digital currency, started weak on Monday, trading at $30,900, down nearly 19% from last week. This is Bitcoin’s lowest level since July 2021.

Some of the cryptocurrencies that have crashed are: COIN -19%, MSTR -25%, BTC -12.5% ​​(since Friday close), ETH -14% (same), LUNA -35% (same). This is the same fate that the commodity market suffered. Stocks like Nasdaq -4%, TLT +1%, Gold -2%, Oil -7%, NatGas -12%, URA -8%, Soyb -2%, VNQ -4%, ARKK -10% all saw massive price gains decrease in the same period.

“The S&P 500 and NASDAQ had the largest correlations to Bitcoin at 0.88% and 0.91%, respectively. A correlation of one means they move equally from one to the other,” says Armando Aguilar, head of alternative strategies and research at Ledn, a digital asset savings and lending platform.

“The S&P 500 and NASDAQ had the largest correlations to Bitcoin at 0.88% and 0.91%, respectively. A correlation of one means they move evenly with each other.”

Source: WorldCoinIndex

In market analysis obtained by TechEconomy, Edward Moya, senior market analyst at forex brokerage firm Oanda, noted that institutional investors are paying close attention to Bitcoin as many who got into it last year are now losing money on their investment.”

“If the $30,000 mark is breached, it could trigger a flash crash environment as multiple whales offload.”

Prepare for unforeseen circumstances

To survive in the crypto market, investors and traders must have tested and proven strategies while being proactive. When big companies like Facebook, Google or Microsoft make positive or negative announcements affecting the crypto market, they should not be ignored.

Keep in mind that Google had banned cryptocurrency advertising on its platform, which is expected to launch in June. Some market watchers have attributed this to one of the reasons the market has seen a massive drop.

Scott Spencer, Google’s director of sustainable ads, said the ban was necessary to protect consumers from fraud: “We don’t have a crystal ball to know where the future will go with cryptocurrencies, but we’ve seen enough consumer harm or… the potential for consumer harm, that this is an area we want to approach with extreme caution.”

Obviously nobody knows what exactly the future of cryptocurrency holds. However, caution should be exercised when trading in the market. Prudence means knowing when to buy, when to sell, and understanding market trends, indicators, and technical analysis.

Chris Ani, one of Nigeria’s cryptocurrency evangelists, hinted that a market nosedive is expected in a free webinar watched by TechEconomy.

He reiterated that knowledge will always remain the most important commodity in the crypto market. Ani remarked aside that many Nigerians are always looking to make money from the market without having the knowledge needed to understand the trends, intricacies and technicalities of the market.

Market Optimism – Will Major Coins Like Bitcoin Bounce Again?

Will this be the beginning of the end? Many market watchers and investors will think about it. Whatever happens when the crypto market collapses in developing countries like Nigeria, especially by anti-crypto crusaders, there will be too much negative narrative.

All experts from different industries agree that investing in digital currencies is highly speculative and no one should invest money that they cannot afford to lose.

Stefan Hofrichter, head of global economics and strategy at Allianz, said the crypto media hype will continue for some time, but he is still convinced that everything will collapse.

In a lengthy blog post, Hofrichter said that Bitcoin mania shows all the classic signs of a bubble about to burst.

“It seems to us that the bitcoin mania is a textbook bubble – and is likely about to burst. As a currency and as an asset class, Bitcoin has potentially fatal weaknesses – which is why we believe it matters when, not if, the Bitcoin bubble bursts. Its trajectory resembles a textbook case of a financial market bubble, and it lacks several key qualities that would qualify it as a currency. ”

According to Hofrichter, the good thing about a bursting Bitcoin bubble is that it doesn’t have a major impact on the “real world” because it’s still a relatively small asset class

“The decline of Bitcoin would have little impact on the ‘real world’ as the market for this cryptocurrency is still quite small,” Hofrichter argued. “As a result, we believe that the risks to financial stability posed by Bitcoin are negligible — at least as far as possible.

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