Steemit Crypto Academy Contest / S1W4 – Reviewing the Instability of the Crypto Market by @dibie(club75)

_{designed in pixellab}

Hello and welcome to my blog.
Today,I decided to take part in the engagement challenge in crypto academy and I will be doing justice to the questions asked.

Stay with me as I let you know my mind and opinion about what we are experiencing in the crypto world today.
Please enjoy🤗
_{(N.B This is purely my opinion and I stand to be corrected in anyway possible.)}

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?

Bitcoin, Ethereum and others coins are tanking in the market today and this is no more news as investors are now trying to seek solace in more secure asset other than cryptocurrencies.

Just in the last 10days the price of Bitcoin and Ethereum has dropped by about 20% and some expert are predicting a further declination in price.
Bitcoin particularly went below $36,000 some days ago which happen to be the lowest point in about a year now.

The cause of these decline in price can simply be attributed to VOLATILITY.
Yes, volatility is the major player in this game of price declination.
In general,it is very risky to Invest in cryptocurrencies,only the strong at heart and those that can hold on for dear life can make profit out of their investment.

More importantly,the price of cryptocurrency went down sharply about a week or two than ever when the federal reserve announced to the public its biggest Interest rate in over 2 decades some days ago and this is somehow contributing to the declination in price we are experiencing in the market today.

It is also imperative to note that it is not only cryptocurrency that is experiencing negativity in this perilous time,the stock market is also facing surging inflation and a similar fate.

This economic pandemonium the market in general is experiencing can be said to be as a result of Russian invasion of Ukraine and the U.S monetary policy that has became more tighter than before by the federal reserve.

Additionally,some expert have assumed that the TerraUSD (UST) also played a significant role in crashing the Bitcoin price some days ago as it happen to be one of the largest stable coin which is suppose to be pegged at $1 but it unfortunately went down by 29cent.

Covid and China tightening policy have also contributed massively to the fall in price.
All of these aforementioned things have caused longer holders or investors to sell their asset and in turn crashing the price of the Bitcoin.

The Bitcoin price continues to decline further and expert says if it goes below $30,000,then we should brace up for what is coming as this coin will definitely drop to $25,000 in no time.

No one knows how long the price declination will last,we are just hoping it doesn't take a life time.
Expert in this field says Bitcoin will hit $100,000 this year,but the question is when??
How long will the declination in price last before it start bouncing back is a question everyone wants answers to, but unfortunately have no answer to, including me.
And I wouldn't want to venture into the realm of speculation as investors around the world are in the "wait-and-see" mode,with literally no idea of anything.

I believe in business and investment in general,things are not expected to always be Rosy and always according to our plan.
When dealing with cryptocurrency,fall in price to the extreme is inevitable and imminent.
it has happened before,it is happening and it will definitely happen in future,that is the cycle of how things work in the investment and business world.

But,we as investors just have to devise a means or way prior to this unfavorable situation inorder to mitigate the effects and not to be heavily affected.

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?

It is no news that despite the fall in price of cryptocurrency (especially Bitcoin),the trading volume still continue to surge.
The drop in price of cryptocurrency didn't play a significant role in trading volume.

In my opinion,
This can be attributed to the fact that the liquidity in the market has become more.
Liquidity is the rate of speed,rapidness or swiftness in which asset and commodity are sold in the market and the fall of price of cryptocurrency have somehow created a surge in the cryptocurrency market liquidity,hence increasing the trading volume.

Recall that when the liquidity in the market is more,the trading volume will also be high and vis versa.

The liquidity and market are interelated and an increase in one affects the other positively while decrease does the same negatively.

Additionally,Alot of investors might want to seize this opportunity to buy the dip with the mindset of making enormous profit later in future taking advantage of the fall in price of the cryptocurrencies and consequently, expanding the trading volume rather the decresing it.

In some cases too,the price of a particular coin might differ in some places,so investors buy them at a low price where the price is down and sells it at a high rate where it is in demand.
From this scenario,we don't expect the drop in price to decrease the trading volume,do we??

For me this is basically the law of demand playing out,The higher the price the lower the quantity demanded and the lower the price the higher the quantity demanded...The fall in price has increase the demand in some way which has inturn lead to the increase in liquidity and trading volume.

Now,to ensure stability in the market,the best way is for investors to brace up and try to invest more as there is no good time to invest rather than now,this will inturn play a significant role in stabilizing the market.

Also, adopting the long time investment plan will go a long way in helping to stabilize the market as well as controlling volatility,you might opt for 5yrs plan which will help your investment go through the business and market
cycle hence attaining stability at the long run.
Diversification of one's portfolio is also a way of dealing with market instability has this will help reduce the risk of lossing all funds invested.

Key point to deal with market instability
•Invest more
•adopt long time investment plan
•diversification of portfolio

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?

_source

Like I made mentioned earlier while doing justice to the very first question,The TerraUSD is assumed to be one of the cause of market instability we are experiencing today,it is also a contributing factor to Bitcoin price declination.

Recall that the TerraUSD which was supposed to be peg at $1 declined by 29cents and this affected the market as it is one of the biggest and largest stable coin in the market.
And now,it native government token which is LUNA is down already.

Luna has also lost about 99% of it total value as it went from about $80 to less than $1 recently and entirely crashing the Terra ecosystem and it native token causing more instability.

News making rounds on the internet regarding the crash was that a certain whale or set of individuals appear to have bought about 1billion dollar worth of Terra USD and consequently shorting their Bitcoin holdings.

And then went on to make a massive withdrawal using anchor,a defi based on Terra network.
This action triggered a drop in deposit as deposit dropped from about $14 billion to $11.2 billion in just a week.

This lead to investors being scared of the unknown and as a result most people pulled out their investment and consequently crashing Luna the native token of Terra ecosystem.

With the TerraUSD experiencing price drop by about 30cent and the Luna token crashing unexpectedly,all of this contributed to the instability in the market today and also the decline in price of Bitcoin and other cryptocurrencies.

Since the UST that was supposed to be pegged at about $1 dropped drop in demand as a result of LUNA crashing in the market,this has affected the market price of all asset as terraUSD that went down by 30cent is one of the largest stable coin in the market,hence causing instability.

Do you think it price will bounce back,how and when??

I don't see it bouncing back soon in anyway,the LUNA token has gone down by 99% already,the margin is just too much for any rapid recovery.
It will take magic or miracle for it to bounce back to it initially stage which was about $80 before it crashed below $1.

It would definitely take years to bounce back and that is if eventually it does,but there is still hope for the TerraUSD, although it is experiencing a drop in demand now but I'm sure it won't take long to bounce back and once it does,I am inclined to believe that the market will become stable a bit again and Bitcoin will eventually start experiencing a bullish trend.

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

Of course,everyone is going through alot in this hard and trying time of general price declination.
Steem as a cryptocurrency is also experiencing price declination and we as investors are also worry about this development.
Saying am not worried about this is not really the truth,everyone including me just wish this phase of price declination just passed already, ushering into the bullish era.

But nevertheless,I am still very much confident in this project and cryptocurrency in general,I believe this things we are experiencing today are bound to happen anyway and as investors we must always look at the bright side of things.
Like they say,the beautiful of a tidious and rough journey lies in glorious ending,and that is what I stand by.

I am sure that the steem will bounce back in no time, taking into considering the measure that have been put in place to further help this project reach the Pinnacle of price.

The club status in place is playing a great role in further hindering the declination of steem price and also the reward distribution method that is being utilise now is playing an effective role too.

As users,I believe the only way to deal with market Instability is to become a long term investor and that is what the steem ecosystem is trying to attain on the blockchain with all of its constructive innovation and ideas on the platform to reduce the number of steem transferred out and sold at a time.

Conclusion

The decline in price of Bitcoin has caused alot of loss to investors with many of them lossing pratically all their funds.
The reason for this fall in price can be attributed to high volatility, government policies,covid and the fall of TerraUSD and it ecosystem.

How long is the price declination going to last is a question everybody wants answers to and wether it will eventually bounce back so that investors can smile to the bank again is something nobody knows.
Investors are just hoping that things goes back to normal because if it doesn't..................
I don't know!

Thanks for reading.

Special Invites:@olabillions, @goodybest @ronindboss.
See you in my next post