Steemit Crypto Academy Contest Season 1 Week 4 - Reviewing the Instability of the Crypto Market by @bongk

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INTRODUCTION

Accept steem greetings from me, I'm glad to have made it through to week 4 it's been a great season and I want to commemorate the efforts of all the MODs and greeters who help to make this previous weeks go easily. So far we have witness a terrible downtrend in the Crypto Market the same goes for stocks, everything is crashing and it is really devastating especially for those who are huge Investors of Crypto, I for one though I'm not very experienced and haven't invested much there's still an effect on me, I've lost a few Dollars but that is small compared to the Billions lost by Crypto users all over the world. I wish to also extend my sincere condolence for the money that has been lost so far, looking at the bright side it is just for a little while and after this moment of crisis will come a great amount of success. I will be reviewing the instability of the crypto market as a whole and I will be answering some questions that will guide us through out the course of this write up so seat back and learn a for a few things.

REVIEW QUESTIONS

Most of the cryptocurrency market is currently experiencing a sharp decline, especially in recent days. What do you think of this drop? State its causes and how long do you think it will continue in this downtrend?

The cryptocurrency market is in its worst ever decline ever since 2020 market rally. Even stable coins are experiencing a crash, actually it is not supposed to be crashing because as we all know the tokens are pegged to the US dollars or a commodity such as gold which garuantees an insulation to this volatility faced by other cryptocurrencies,but that is not the case. This means that the cause of the cryptocurrency market decline is not only related to factors of demand and supply of the tokens in the market but on other things.

Now the causes of such a decline is not just as a result of recent activities such as War, Political decrees or crisis but as an accumulation of various activities in the last 2 years, now let us see a few of these driving forces that will likely affect a crypto market and then we talk about the main cause e of the decline in the Crypto Market.

Just like the FOREX market, the Crypto Market depends on the level of demand and and supply; When demand increases faster than supply, the value of the market goes up this is usually noticed when leading tokens like Bitcoin experience this forexample when the price of Bitcoin dropped to $28000 (or by 5%) it is because the supply was higher than it's demand, this decline is not usually noticed since the Crypto Market is very volatile but in this case it lasted very long.
The Crypto Market also depends on the Cost of Production of every token, now a token of a cryptocurrency is produced by mining others are produced by staking, processes known as Proof-of-work, Proof-of-stake, Proof-of-brain and so on. When a new token is mined, the supply increases by a certain amount which must be balanced by demand.
Another leading factor is The Governance this is really important especially in cases where the coin is decentralized now an example is in the case of Ethereum changing it's policy from PoW to PoS, rendering mining machines useless and eventually having an effect on the cryptocurrency.
Cryptocurrency Exchanges also affect crypto market to a great extent, usually crypto has to be changed to FIAT or to other Cryptocurrencies, that's why Cryptocurrency Exchange are formed.

Cryptocurrency markets are very volatile and no one can tell if it's going to drop or rise again or what circumstances may befall it in the few days though we hope it goes back to normal soon.

Why doesn't this drop in the price of a few coins decrease their trading volume (eg: Bitcoin)? How will they deal with this market instability?

In trading volume represents the number of units that change hands for stocks or future contracts over a particular period of time.
Before a cryptocurrency is launched,all its mining plan is provided giving an already set plan for the Cryptocurrencies and it's consumers, the decline in price only slows down the plan. Cryptocurrencies like Bitcoin have a mining limit amount set at 21 million BTC which means once this value is reached.
Another reason is that the volume is the amount of tokens held by members in the market we have the BUY volume and the SELL volume , the volume controlls the price of the currency.

What is the relationship between the current instability and the downfall of the Terra ecosystem and its Luna currency? Do you think its price will bounce back? If so, tell us how and when?

The Terra ecosystem created the LUNA token as an algorithmic stable coin backed by UST, though it got really high in profit , it crashed just recently because of its draw backs due to its settings because this recent crash also affected the price of the stable coins such as UST , United State Dollar Coin USD coin, Binance USD (BUSD), and since LUNA is pegged to UST algorithmic, it's decline was also exponentially great that it couldn't recover very fast.

For now there's no info about if it's going to bounce back or not but with time I'm sure it will

Our Steem ecosystem, like most currencies, has been affected by this market downturn, has this caused you as a user some stress? Or are you still confident in this project? Give your opinion, specifying the arguments that support your review.

When the Price of STEEM dropped, I was devastated because I needed to sell my coins to provide for my school needs, I was frustrated at that time since I depended on the rewards gotten from Steemit, but nonetheless it didn't make me doubt the cryptocurrency or the project, I am confident the token will rise again and I'll be able to sell and provide for myself but for now I'll just keep earning STEEM while waiting

CONCLUSION

The cryptocurrency market is indeed really volatile, one minute it's down and the next minute is sky rocketing that's why there's hope that it will change green again at anytime soon, some more than others. I was really excited to review the crypto market today and I'll like to invite @b-naj, @wase1234,@ngamd to this contest.

Thanks for reading 😌😌