If you’re still wondering, “Is crypto going to crash?” you’re not alone. There are many reasons why the market may crash, from rising interest rates to inflation. These factors can affect investor confidence in alternative assets, causing prices to drop. Moreover, if interest rates increase, it may push some investors to save their money instead of investing in crypto. Furthermore, when cryptocurrencies become less desirable, the market can lose a lot of money if people decide to sell at a loss.
The cryptocurrency market has faced plenty of controversy in the last year. Many speculators and investors are concerned about the emergence of a new financial instrument. But, it is important to remember that mainstream stock and bond markets have declined for a long time. There’s a high risk of crypto price contagion because many investors don’t have the proper knowledge or experience. As a result, a crash could devastate the market and send investors running.
Although many experts agree that the crypto market is in a bear phase, there’s still a possibility of an upturn. For one thing, increased regulation is a concern, and it could affect cryptocurrency prices in the short term. You’d better diversify your investments into other assets that provide steady returns.
A cryptocurrency project with a strong purpose and a high number of users will likely survive the crash. A coin that lacks utility is more likely to fail during a crash. If the leadership behind the project is anonymous, it’s probably a bad idea. Otherwise, the project may already be failing. If you’re unsure, ask yourself, “Am I putting my money into a bad crypto project?”
The global stock market has also been on the downfall lately, primarily because of rising inflation and inflation fears. Higher interest rates mean that borrowing money will become more expensive. The same is true for the cryptocurrency market, with bitcoin and Ethereum falling by 50% in the last month. The recent price fluctuations have also coincided with surging inflation, uncertainty over COVID-19, and several new regulatory actions by the U.S. government. A short-term investor might even be contributing to the decline.
Another reason to invest in crypto is that banks are getting more regulated. This could lead to the implosion of the U.S. dollar. Likewise, the EU and U.K. have plans to regulate cryptocurrency to protect the public from the pitfalls.
