Topic: Several reasons explaining the Crypto Price Crash (without BS) (Read 544 times)

Some of the drops in the prices are caused due to the combination of factors like: Excitement about low-quality coins, to negative remarks from Elon Musk, to China's recent crackdown on crypto services

Of course, if you own a Van Gogh painting and want to make an NFT out of that and sell it, you'll still fetch a couple million dollars for it as it's the only one in existence.

Same with screensavers - and I am specifically referring to the animated elaborately-designed ones with shading and lighting effects like the DirectX screensavers made by MS for Vista almost 20 years ago (Wow, the world has really missed good screensavers) or perhaps the almost-as-good Windows XP-packaged screensavers, not 2D xscreensaver pixel art. These things would fetch a price of say 1-10ETH i.e. roughly 4 digit figures.

Almost everything else being sold on OpenSea is garbage including the Bored Ape trading cards so I wouldn't be surprised if NFT flippers have been left high and dry with this bear market.

The US economy, including US interest rates influence the rest of the world.

Interest rates are not only rising, but are also projected to rise further in the future. Not only that but QE is being stopped/reversed. All of this is taking money out of the global financial system, and is discouraging people from taking risks with their money.

Mostly newbies from the bullish cycle of 2020-2021, the veterans from 2018 crash would know better.
The important thing here is risk management, know ones objectives and control the feelings.

Yesterday it was a massive freak out when the price touched 17K, while many were buying, others were panic selling, it is still early to say we have reached a botton,though.

i personally have hoards from 2012(and other years) prices so im classed as a old whale (but im not selling any time soon, even though i can sell now and profit still.. but dont worry i have no desire to sell any time soon. im happy. and i wont sell at any less. i am not one of those panic sellers)

all the other old whales and miners with coins acquired below $15k value that are selling now. are giving to buyers who are setting their value at the prices they bought at above $17k. giving a new support with higher percentage of holders that have a new acquisition value(buying price) above $17k.

meaning there are less people still with coins able to profitably sell for under $17k than last month thus less people willing to sell below $17k than last month

so my opinion is let them sell. let there be less people able to sell for less. because the long term result is that it builds up support for the 'bottom' to go up.

in short. all the people that have sold after 2018's bottom. have helped to support that by there now being more people with value way above 2018's bottom that will refuse to sell below that bottom

in short. all the people that have sold after 2019's bottom. have helped to support that by there now being more people with value way above 2019's bottom that will refuse to sell below that bottom

the 2020-2022 era is a funny era. although there are people that bought at $20k-$70k. there were also some miners that were able to mine CHEAP coins due to the hashrate competition impact of the 'chinese ban'
but as soon as they sell for profit. the new holders of them coins will be holding coins at a higher price than that era's cheap coin value

Some of them sold their Bitcoin around $40k and preferred to use fiat currency instead of keeping reserves in Bitcoin. Luckily it helps us fund our faucets with more $.

CoinPot for instance collapsed because they never hedged against the rise of value in Crypto (we do now buy a bit but never ever believe in it for the long term).

That seems to be based on the 4-year winter cycle or halving cycle. We are already nearing the same cycle closing and which means heavy drop in price of the bitcoin because most of big whale miners around the world will be profiting from the same. If they sell at the current price then definitely it's gonna be worst for them, idk they may loose profitability in the process.

However, I believe that this is just one of the reason for the same but may not be firm one.

There is impossible judgment for the current situation of bitcoin.

I'm wondering how many people are now freaking out and withdrawing money from cryptocurrency? Given the current state of the market, I think that some of these people will still be.

1) I disagree. It did affect the market but the effects weren't nearly as big as the crash itself. Not to mention that the recent crash to $18k happened long after the LUNA scam
2) I disagree with this also since it has happened before and people don't really react to these things that badly specially since it was a small drop not the eventual demise of Tether
3) This may have contributed to the crash more than the rest but I still don't consider it as a big cause
4) Not effective at all. In fact these are the result of the crash not the cause of it
5) Binance is an altcoin exchange first and a bitcoin exchange second. It's hack (which was a much bigger event) didn't cause a major crash, possibility of some legal shenanigan is not going to cause a crash!
6) Not new.

Not bitcoiner has ever given enough shit about tokens to want to start selling their bitcoins because NFTs went belly up.

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My analysis is that the reason is a single one with two steps.
First people were convinced that bitcoin price should follow other markets (they succeeded to some extend in 2020).
Then the US (and its colonies') economy started falling apart and those who were convinced in step one started panic selling in accordance with the US economy crash.
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Most of the crypto businesses(like Celsius) were built on unsecure foundations. The situation on the global financial markets changed and those crypto companies are going south. Some libertarians say that the market always finds a way to kick out the companies that aren't flexible, competitive and stable enough to survive on harsh conditions.
BTC and the big altcoins crashed because of the overall panic caused by centralized crypto services having problems with keeping their promises and not having enough coins to payback their investors. If we add the global situation, we get the perfect FUD storm.
The sad part is that Bitcoin didn't work as a safe heaven and a protection against inflation. I guess that the Bitcoin cycle (if there is a cycle) cannot be interrupted by the global macroeconomic cycle.

This decline occurred or started when the Fed tightened monetary policy in which the Fed tried to fight uncontrolled inflation, so that this resulted in investors staying away from speculative assets in global markets.

So somehow the root of the problem is inflation.
let's describe a little about this inflation.
the impact of inflation such as decreased export capacity, difficulty in predicting basic prices, reduced income, and decreased public interest in saving. well these factors or impacts are also creeping into the investment world such as the fall in bitcoin prices in particular. and followed by other altcoins. because when prices rise, while income still does not increase, it is certain that the use of money will be more than usual so it is difficult to set aside money for saving or investing. Even in such a severe level that many people lose their jobs as a source of income. so that even people who lose their jobs will withdraw their investments and savings to be used to meet their daily needs.

plus there are parties who have been anti-bitcoin or crypto in general from the start. then seeing this situation they will use it as best as possible to make news that corners bitcoin or crypto in general. and the effect is like dominoes. create panic. and this is what is happening as of now.
and it should also be noted that the decline is not only in crypto but in almost all other stock investment sectors.

The above reasons for the current general decline in this market, as presented by the OP, seem unconvincing to me. They are too small to cause a general fall. Looking through this post, I noticed the previous periods of falls in 2014 and 2018 indicated. If we add here the current fall, that is, 2022, then we get a certain pattern of falls every four years. If we add here the four-year cycle of bitcoin associated with its halving, then it turns out that the crypto-winter constantly follows a large price rise in the market after the halving. Therefore, we are now just in a period of market decline. These falls have passed, and this one will pass.

The interest rates haven't been raised since 2007-2008, this is not a normal cycle but a change of events. Many people seem to fail to understand this basic concept whilst in the meantime the "smart money" moves away from Crypto and Bitcoin and goes to gain interest rates without all the complexities involved (for us the stock market is complex but for them - hedge funds, banks etc. it's the other way around).

Consider also that there is a market cycle. Last year bitcoin and some altcoins created a new ATH so it should be normal for the market to have a correction. Cryptos can't just always pump the way we want it, traders that bought early will always take profit at some point so we should expect a dump after pumps. The increase in commodity prices because of Ukraine and Russia conflict also affects the market because some people are forced to liquidate their assets in crypto.

You're underestimating the global economy. Crypto sphere took a hit with the Luna/UST collapse but that still does not explain the Bitcoin drop. Global economy was fragile following the COVID lockdowns and the expectation was for a faster and sharper recovery. High inflation meat federal reserve had to lower rates causing low economic growth.

https://www.bloomberg.com/news/articles/2022-05-15/goldman-sachs-cuts-us-growth-forecasts-for-2022-and-2023

All the economic institutions are cutting their projections for GDP of the U.S. It makes sense that people are liquidating assets -- they don't know where to put their money, so they're electing for tangible assets (metals, real estate).

Luna/UST only represent a small portion of the crypto market. It's collapse doesn't even come close to the entire story with crypto.

you are quite correct. many businesses work on the 3x plan

if a wholesale/manufactured shirt cost $2, and wages+other costs is $2 then the sale of shirt is atleast $6 to give a $2 profit. where the sale is 3x the cost. as a 'reasonable' value shirt.

yes if you have a brand or a popular shirt you can sell for more. but you can also end up with a warehouse is full of shirts that just never sell too..

yes you can make alot of money with the right product. but you can also lose alot of money with a bad product.

its the same case with all things.
there is no promises in crypto or business of guaranteed billionaire status.
for every successful business that has made a CEO a bilionaire, there is a million businesses that wont reach billion status and the same again for businesses that have failed entirely

..
disposable income is not to throw $10k at something. as yes you can buy alot of other promising things with that. true disposable income is the funds that you waste. funds which you dont see that value exist beyond the following week

EG its not about risking your tenancy by putting your rent money to bitcoin or a business. because although when you move home in future you get nothing back from the rent you paid. however that rent that week-month secures shelter for you. so its not disposable

but fast food, luxury items that dont have any function of helping you survive/live/be secure for weeks/months. where by its just something that is lost and not returnable in a few days/week, is disposable

disposable income is the stuff that wont make any ROI or profit from. its the waste money. the stuff you spend on stabucks coffee.. the stuff you spend on netflix subscription. having your hair dyed or having a haircut. or that bacon baguette for breakfast, the chicken wrap for lunch and the pizza for evening meal.

add up all them little wasted portions of money you dont miss and put that money you dont miss into something that can make returns.
maybe yes buy some shirts.. if you have a shirt design that is popular to have demand. and if you have the right shirt sizes to fit the potential customer without having to stockpile 100 shirts just for the hope of catering to 20 people, (5 different sizes are the norm selection people need to cater to (s,m,l,xl,xxl))

its then not about just buy once, hold for 50 years and hope to be a billionaire. its to increase the returns by 2x-3x and then repeat.

no one ever said buy 100 shirts, hold them for 30 years and hope to get a billion $$.. thats not how to become a billionaire from the shirt industry

its to turn $100 into $200 by selling $100 of shirts for $300 netting you $200 after other costs
its to turn $200 into $400 by selling $200 of shirts for $600 netting you $400 after other costs
repeat

same goes for crypto
buy in 2012 16 coins for $6each($100).. sell 16 coins in 2013 at $1000 each.. ($16k)
buy in 2014 32 coins at $500each($16k)... sell 32 coins in 2017 at $10k each($320k),
buy in 2018 64 coins at $5keach($320k)... sell 64 coins in 2020 at $40k each($2.56m)
buy in 2022 128 coins at $20k each($2.56m).. sell 128coins in 202X at....

I am not entirely sure if "disposable" income is as disposable as you may think. In this day and age, we are living in a world where crypto is making things a bit more volatile than it has to be. Look at all the other things people can do with their money, and realize that it is not as great as you may imagine.

For example, if you bought 100 shirts and sold it on a concert, you would have made a lot more money right? Business is still the king, you are not going to start off with 100 bucks or 10k bucks whatever and become a billionaire via crypto, but business ideas makes that possible. Crypto is and will always be great for long term investment option, but the volatility makes it questionable.

That's definitely a valid point - people should invest only what they can afford to lose, including Bitcoin.
No one can see the future, but the markets are definitely ruled right now by fear.

I think you are the most detailed poster in this forum, am saying this base on every other post of yours I have come across.
That being said, you are absolutely right, why not invest that disposable income in something that will bring great value in years to come than spend it on things that will lose value the next day or so.
Despite having the ability to form our opinion as humans, we can also get ideas from others' opinions too.
Investment is all about being smart and setting some boundaries so you don't end up losing it all because of being overwhelmed. You have really made a valid point.

We should also consider other markets on this to identify some reason why the cryptocurrency market is crashing. As you can see that stock markets are also crashing, so it could be also a reason because, for some time, the cryptocurrency market and the stock market are somehow correlated, that's why I am very calm.
What OP mentioned is only for the crypto market probably reasons which are good also and got a point, especially an issue on UST Terra Luna and stable coins de-pegging issue.
I can also consider the high inflation rate which we currently experiencing in most of the countries in the world, all are affected.