Recently, many activities have been happening in the crypto market. The market is experiencing short-term volatility. This short-term volatility results from several factors, which include rising inflation. Briefly, I will discuss “bitcoin” and its role in what’s going on in the cryptocurrency market.
Bitcoin and the crypto market share a direct form of relationship. You may be wondering what I mean by this statement? If you study the crypto market carefully, you will see that a bitcoin change in value usually changes the cryptocurrency market.
You must have heard of the term “Bitcoin halving”. This is what is going on at the moment. Bitcoin halving is when a new block payout is halved (the payout is for mining a new block). This begins with a massive crash, which most people in the crypto market are familiar with.
After a massive crash, what next? The market tries to recover back half of what was initially lost, and it then reaches the point of recording high numbers.
All this has happened thrice in approximately four years. Therefore, it is right to say that the fourth bitcoin halving is around the corner.
Now, the question is, “will the crypto market recover?”
Presently, the crypto market is gloomy. Many people have been rushing to sell what they have because they don’t know what the future holds. However, some big investors have been using this opportunity to save what they have and buy more of the currency. The future of the crypto market has much volatility. On the 20th, Bitcoin fell below $30,000, and the market has been struggling to make a recovery.
The volatility of the market cannot be attributed to one factor. Other factors responsible for the market instability include; a geopolitical crisis, a shift in U.S monetary policy and rising inflation. These are the several factors affecting the short time condition of the market. All forms of investment have their level of risk; the crypto market is not an exemption.
Among the stable coins in the market, we have TerraUSD. It played a significant role in the recent market crash. This is because TerraUSD is one of the most significant stable coins, and it is supposed to bring stability into the crypto market. For the past few weeks, instead of stability, the coin has brought high volatility to the market. Surprisingly, a crash in a single stable coin caused an uproar in the entire crypto market.
TerraUSD is a safe digital asset that brings about safe valuation. This coin’s value is attached to the price of a different asset, for instance, the US dollar. In addition, the asset it is connected to can be a fiat currency. A fiat currency is all kinds of money that the government decree to be a legal tender. Therefore, fiat money issued by the government is not backed up by any commodity. The stable coin “TerraUSD” is meant to maintain the same value as its attached currency. Therefore, they share a direct relationship because it is an algorithmic stable coin.
Luna is a special crypto coin in TerraUSD. This token has caused a lot of challenges in the crypto market recently. Over the recent days, people with this coin have been selling massively because of how the unique token has become volatile.
The crypto market is bleeding, and investors are not happy with the way things are going. Luna is worth nothing compared to what some individuals invested in the coin. Due to the present circumstances going on in the market, no one is sure of what we will wake up to tomorrow. However, if there is stabilisation or regulation of the network, it will help provide a clear blueprint that might increase the value of LUNA by the end of 2022.
There is an urgent need for bodies that can guard against the occurrence of this type of market crash. Due to these activities going on, the severe blow should be a time for investors to relax and take things easy. As of now, there is no sign to prove that the market is recovering soon. But if you invested with a long-term vision in mind, that is great. Most of these native tokens are built based on developed projects or frameworks. For instance, TerraUSD is built on Cosmos SDK.
If you are presently anxious about what is going on in the crypto market, take a deep breath and relax. Don’t allow a price drop to increase your blood pressure. Your mental health is more important. Besides, a temporal change in the price of coins should not set your heart on fire. The purpose of investment is to enjoy a long-term benefit. During this period, it is difficult to conclude that the crypto market will be in recovery mode soon. However, some investors are up for the game of buying the dip with a positive mindset that it will be a good sell in the future.
If you are an investor interested in the crypto market, it is not a bad idea. However, you should expect volatility in the market. The best decision for you to take is to diversify your portfolio. Volatility will continue in the crypto market, but when you spread your total portfolio across a series of investments, you will minimise your risk.
Please, if you are an investor, start including a variety of different types of assets in your portfolio. When an investment does not go as expected, other assets can compensate for any loss experienced. This is a better strategy for investing!
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Recommended books for further reading:
- Rich Dad’s Guide to Investing: What the Rich Invest in, That the Poor and the Middle Class Do Not!
- Smarter Investing: Simpler Decisions for Better Results
- How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology
- The Barefoot Investor: The Only Money Guide You’ll Ever Need
- The Five Rules Successful Stock Investing: Morningstar’s Guide to Building Wealth and Winning in the Market
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