Greetings,
It's your friend at mondraye, and today I will be helping us reflect on the current market condition.
Due to the long lasted market condition, I will be discussing on the cryptocurrency market and what the future might hold.
The nature of cryptocurrencies in our current society has made it nearly hard to find somebody who hasn't used them at least once. Without a doubt, cryptocurrencies have transformed the fabric of modern existence.
Since the first cryptocurrencies were created in 2009, or nearly 15 years ago, we can see that there have been an increasing number of cryptocurrencies. Today, there are close to 10,000 cryptocurrencies, all of which are different but share the decentralization principle and aim to address the issues that a centralized monetary institution faces.
From just $1000 in 2009 to $3.6 trillion in late 2021, the value of the cryptocurrency market has grown exponentially over the past few years. This increase in market capitalization can be attributed to the fact that cryptocurrencies are now a global phenomenon in the sense that people from all over the world are investing money in the Market.
But what's important to realize is that it took 15 years for the market capitalization of cryptocurrencies to go from $1,000 to $3.6 trillion. Instead, it experienced a process known as pulses, which involves upward and downward movement.
Throughout the past 15 years, there have been several instances where the market capitalization of cryptocurrencies has fallen below its previous peak.
It is obvious that when people invest money in the market, the price of the market cap increases. However, those who have been in the market for a longer time tend to want to cash out when they believe prices have increased, which is why the market cap prices tend to fall once they reach very high levels.
When Bitcoin reached its all-time high (ATH) of $32 in 2011, it did so quickly after reaching that level. There was subsequently a dramatic decrease in price that reduced Bitcoin's value to just over a cent.
Bitcoin reached another record high in 2018 of $17,000, but what came next was an abrupt drop below $12,000. For the majority of 2018, Bitcoin ranged below the $12k zone.
Bitcoin hit another record-breaking high of $64,000 in 2021, but what came next has been a gradual drop that has lasted until now, with Bitcoin losing 68 percent of its gains. Currently, the price of Bitcoin is $23,000.
One thing is clear from this data: the market moves in pulses in whatever way it chooses to go.
At the moment, the crypto market has dropped from a peak of $3.6 trillion to a low of $1 trillion, or over 64%, drop from its all-time high.
It seems quite simple to me to understand how the market works: for every greater high, there must be an equal downward move. This is because investors who entered the market early would always want to withdraw profits at some time, which causes the price to decrease.
The momentum for an upward movement then shifts to a downward movement as fears set in to the market. People tend to think the worst is yet to come for cryptocurrencies and they start to sell assets at a loss for fear that the price may go dipper over time. When prices fall those who wish to invest in the market become skeptical on doing so, so the momentum for an upward movement then shifts to a downward movement.
But from what I've seen so far, whenever the market has gone this much, many people have sold assets at a loss out of panic or fear, and eventually the market swings around and moves upward because those who missed the initial wave would always be looking to buy in at a lower price.
It is very challenging to provide a clear answer as to when it is acceptable to leave the cryptocurrency market. This is because the market is driven by greed and fear, so it doesn't always pay attention to technical and fundamental analysis of the market. Instead, it pays attention to the prevailing market psychology of the masses who are in tune to make investments.
To be a very successful trader, you need to be able to analyze the general sentiment of traders, both institutional and retail traders. This will give you an advantage when deciding what to do next in the market.
We have often observed how, as a result of the psychological conditions that currently exist in the market, good news causes the market to boom, while bad news causes the market to crash.
The market is still heavily skewed toward fear, as evidenced by the greed to fear ratio, which indicates that people are selling and shorting the market rather than buying and longing it.
Since the inflation brought on by the Russian war is still in effect, one of the main causes of the dip, it is unlikely to end anytime soon. Instead, the scale will likely continue to shift from fear to greed once the war is over.
Cryptocurrency is not going away; I can nearly promise you that by the following year, it will have surpassed its previous record high.
The market size might hit $5 trillion, and the price of bitcoin should approach $100,000.
If you're wondering why, it's because every time the market declines, there are millions of buyers ready to invest more money because we're all looking to profit.
We would start to notice enormous price increases in cryptocurrencies as soon as the war is done and inflation starts to decline.
I won't lie, it will be quite difficult to look at your portfolio during this time, with each day's dip Lowe increasing your sorrow over not selling sooner.
the worry of having to sell your portfolio at a discount from its peak value if you choose not to do so.
The harsh truth is that the portfolio you believe to be a little portion would be drastically reduced again in the upcoming months due to the market's current state of full-blown panic.
My best advice is to be a diamond hand and hodl throughout the bad times because you will ultimately profit from this risk. To further understand the concept of diamond hand, read up my previous post by clicking here.
Sell your asset at the current low value and do away with whatever you wish with your funds.
Sell part or all your asset and wait for a further drop in the market. Then you can buy back at a lower price and enjoy greater gains during price recovery. This is also a risk because the price might not go lower than what you sold or you may not know the right time to buy back.
One thing is certain: as long as cryptocurrencies have a useful purpose, there will always be a value associated with them. As a result, the only way cryptocurrencies could disappear is if a centralized bank were able to create a decentralized token that they would distribute to the general public.
However, it is impossible since a decentralized token of that nature would be a cryptocurrency, which we already have.
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Nice s article
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