Steemit crypto Academy contest||S1W4~ Reviewing the instability of the crypto market by @merci26

Hello friends,
Welcome to my blog. It’s already the end of the week for the Steemit engagement challenge contest. Honestly the week has been a very hectic one for me, but I am glad that I am able to make this entry today. This week in the cryptoAcademy, we are expected to review the instability that is rocking the crypto market. It is indeed a good one, as everyone including myself is affected. Read along with me as I drop my own opinion in respect to the subject matter.

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

Crypto Trading is one that is not good for the faint hearted. Like we have studied in our various classes here in the crypto Academy, we have come to understand that crypto currencies are very volatile and very risky. They are not immune to crashes, and no trading pattern or method is 100% effective. Cryptocurrency is one that can make one acquire massive wealth as well as make them lose all. Just like we have the bearish and bullish aspects of the market, a crypto trader should always have in mind that the market will not always be bullish, as such a bearish trend should be expected.

The crypto world is a vast one, and cannot be fully understood within a short period of time. It is one that has lots of internal and external forces affecting its rise and fall, and as such the recent fall rocking the crypto market could be attributed to some of the points listed below;

The Feud Between Ukraine and Russia

In today’s world, we cannot mention or talk about Economy without mentioning the two countries that are the drivers of the world Economy-Ukraine and Russia. Since the inception of the feud between both countries, a lot of individuals as well as sectors have gone into recession as well as total hardship. Schools have closed down, people are scared of their lives, some have died, while some have relocated leaving their businesses behind. The feud between both countries have affected tech companies as well as various stock markets, with the crypto market inclusive.

Governmental Rules and policies: often times, government officials tend to pass news or place restrictions on crypto currency’s which in turn tends to drop down prices of crypto. When such news on bans are made, citizens of such countries try to sell off crypto currency which will lead to a decline in prices.

False News Rocking crypto world

It is nothing new on the news about the incident that happened last week. It was all over the news about the great fall of the mighty Luna. It was indeed devastating and frustrating on how Luna that was a 100$ within a twinkle of an eye dropped so much that in some news, some people who are faint hearted resulted in committing suicide. The news of the fall of great Luna, began to make people doubt the trust worthy nature of other cryptocurrency that we might see as stable., infact that fear, resulted in a lot of individuals liquidating their assets by selling off in other not to lose all their funds.

Well, I am not a soothsayer to give an exact time as to when the decline of the crypto market will end. But, I will say in general, that looking at most historical charts and data, we would be able to predict when a bearish end will be. Also, to be able to get a perfect solution to any problem, the cause of the problem should be stopped. If the factors we discussed above are not solved, then the problem (decline) will continue. In a nutshell, the crypto market will only bounce back, when the problems rocking it is stopped or removed, as well as when the rate of demand exceeds that of supply.

Why is it that this drop in the price of a few coins does not decrease their trading volume (eg: Bitcoin)? How will this market instability be dealt with?

Trading volume has been wrongly assumed to be indicative of positivity around an asset. With higher trading volume wrongly being assumed to imply positive market psychology and vice versa.

Against this background, it is clear that we cannot answer the question raised above without diving into what the meaning of trading volume is.

Trading volume has to do with how an asset is being traded taking into account both buys and sales. Trading volume has to do with the rate at which buy and sell orders are executed within a given period of time. On a normal condition, it is expected that the instability rocking the crypto market would lead to a decrease in the trading volume, but that is not true in the case of Bitcoin and some other coins. Most people sell off their bitcoin, as they do not necessarily want to lose all funds, while some others see it as an opportunity to buy and hold with the mindset that the price will increase in the future. The constant buying and selling of an asset, tends to increase it trading volume. The trading volume also tells how well an asset has done.

Dealing with instability

Like I said above, the crypto market is very volatile and as such instability is always expected. But to deal with the issue of instability, one has to apply the following points.

• carry out meaning fundamental and technical analysis before going into a particular asset. Study the project behind the asset, trading volume, purpose behind the asset. Try to check out for news with respect to such asset so as to be able to minimize loss.
• Remember, the market is very volatile, do not buy a coin with the prospect of holding it for a life time, as you are not the owner of the asset. Remember to always use a good risk management.
• Most times we see that when the supply of a coin is more than its demand, instability is expected, to reduce this, hard fork is necessary to reduce the rate at which coins are minted.
• since the supply is more than the demand, burning should be carried out on assets to reduce supply and increase demand.

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?

Cryptocurrencies in it's entirety is like the human body, all projects are connected to each other, though, unlike the human crypto projects are not always physically connected, the human mind is what makes the connections.

The crash of the Terra ecosystem had a significant role in the recent crypto instability as a result of how this event impacted on the trust people had on significant crypto projects and the trust vested on stable coins in general. This event practically resulted in significant drop offs from the cryptocurrency space as it was as disappointing as it is a betrayal to people's trust.

The unfortunate failure of Terra just added another layer of evidence to the reasons why people should develop distrust on crypto and the ripple effect could only be felt across the market, just as an injury to one part of the human body can adversely affect the function of the whole body.

Will Terra Bounce back?

It is hard to believe that the Terra ecosystem will be revived. First of all, the brains behind the project dont seem to be committed to reviving the project. Even though the actions leading to the demise could be considered poor decision, nothing, at least to the best of my knowledge is being done to revive the project.

For now, Luna is another shitcoin in the block and it may only be remembered in history in few years to come. We can't really predict all the future holds, but the future doesn't seem good for the Terra ecosystem and the Luna coin.

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

The recent crypto downturn has not caused me my confidence on the Steem Blockchain and it's ecosystem. Crypto volatility, downtrends, and failing projects are not new. But Steem Blockchain as a project has gained enough credibility and my trust that a little downtrend is not enough reason to fear or freight.

Steem Blockchain has survived the test of time and all forms of turbulence since it's birth, while I am a bit worried that I may not be able to sell some coins while I wait for the market to recuperate, I confidently HODL my Steem waiting for better days.

Conclusion

It is true that the market is in a state of instability at the moment, the wise ones will grab the opportunity of grabbing more assets as we all know that in no distance time, either later or sooner the market will definitely bounce back.