CRYPTOCURRENCY CRASH?!

With a market capitalization of around 500 billion dollars, the total value of the cryptocurrency-market is still almost 3,000% higher than in early 2017. People would speak of a bubble for less. Often, after such returns, there is a big crash to let the air out of the bubble. Is it different this time or will one of the following 4 triggers set a real crash in motion?

Julian Hosp from TenX, a company that sells debit cards to issue cryptocurrencies, says that you should always be prepared for the future. He sees 4 potential triggers that can cause a crash on the crypto market.

• 1 - Regulations

We have already seen it happening in China, Russia, South Korea, ... Governments see cryptocurrencies as a threat and are trying to regulate the market. Regulation in these countries ensured that the market shrinked and investors started searching for other opportunities, but if Europe and the United States also impose far-reaching rules, this can have far-reaching consequences.

Julian Hosp estimates this chance at 10% with a corresponding correction of 50% if it occurs.

• 2 - Tether scandal

When a cryptocurrency like Stellar has a market value of 10 billion dollars, this does not mean that 10 billion dollars have flowed into Stellar Lumens. But there is one exception: Tether.

Tether is designed through a complex system that every $1 in Tether is also $1 cryptocurrency. Tether currently has a market capitalization above 2 billion dollars. Tether claims every Tether produced is backed by 1 US dollar, but some sources doubt whether there is effectively 2 billion behind this cryptocurrency. There are many cryptocurrencies and cryptobrokers connected to Tether and if something is not right, a Tether-crash could trigger a domino effect!

Julian Hosp estimates this probability at 10% with a corresponding correction of 10% to 15% if it occurs.

• 3 - Cryptobrokers that fall over

The Coincheck hack has done little damage to the cryptocurrency market. Nevertheless, Julian Hosp expects that problems with one or more cryptocurrency brokers may plunge the market into a recession. When cryptobrokers like Coinbase or Binance have difficulties, it becomes a bigger problem. Especially the lack of fresh money flowing in the market can put the cryptocurrency courses in a lot of trouble!

Julian Hosp estimates this chance at 25% with a corresponding correction of 10% to 15% if it occurs.

• 4 - Buying cryptocurrencies with debt

Some cryptobrokers allow to buy cryptocurrencies with a credit card and allow margins where you can buy more cryptocurrencies than you have money on your bank account. In both cases you are buying cryptocurrencies with borrowed money, just like the margin calls on the stock market.

Purchasing cryptocurrencies with debt is NEVER a good idea in my opinion! When the coins fall, this strengthens the decline and the person who borrowed money will be in trouble.

Julian Hosp estimates this chance at 20% to 25% with a corresponding correction of 5% to 10% if it occurs.

Source: CNBC

MY OPINION & ADVICE

I am still HODLing all my cryptocurrencies (holding them for dear life). The arguments stated in this article are definitely a lot of reasons why there is so much FUD (fear, uncertainty, doubt) in the market right now and why the cryptocurrency prices keep dropping. I think a lot of people are starting to panic-sell.

Nevertheless I still have a lot of faith in the longterm of cryptocurrencies and I expect a recovery in the months to follow, but yes there are a lot of weak hands who are being shaken-out of the market right now. We are experiencing a shortterm bear-market and I must admit that it is difficult to see the value of your coins go down this much. A lot of new people in the cryptocurrency space feel this way and are thinking this might be the end of crypto, but I believe it is not. We might go down further and find a bottom there but then there will be big institutions and other investors who will see this as a buying-opportunity (which it is), they will drive the prices back up!

So HODL tight! Remember you are not alone. Don't sell your cryptocurrencies this cheap, you will regret it in the future.

What is your opinion on this matter?

Will we go down further? Can this be considered a crash? When do you expect us to recover?

Disclaimer: I am not a financial adviser nor am I giving financial advice. I am sharing my biased opinion based off speculation. You should not take my opinion as financial advice. You should always do your research before making any investment. You should also understand the risks of investing. This is all speculative based investing.

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