Why is the Crypto Market Down?
There are two things in life that are unavoidable: taxes and death, Benjamin Franklin, once famously stated.
With the introduction of cryptocurrencies in the modern world, there is one thing that is more definite than others: volatility.
Cryptocurrency prices are notorious for swinging violently. The market fluctuates from up to down, often in a matter of minutes. You can go to bed and wake up to price changes that are mind-boggling. Volatility has been a feature of crypto markets since Satoshi Nakamoto introduced Bitcoin a little over a decade ago.
In the cryptocurrency community, Bitcoin has played a large and leading role. The Mother Coin, as the first to appear on the scene, has maintained its top spot in terms of market value and is worth a significant portion of the entire crypto sector.
When Bitcoin appreciates or depreciates as a result of its continued dominance, it has a rippling effect on other cryptocurrencies. Altcoins have been reported to lose or gain value, sometimes more than Bitcoin. Because of its market dominance, Bitcoin is a common source of volatility in the cryptocurrency market.
As per the recent news, the cryptocurrency market slowed this Wednesday, i.e., 19th January 2022, as leading virtual coins' prices fell more as a result of rising inflation and the ongoing Covid-19 crisis. The renowned cryptocurrency's share price dropped to $356 billion, with a $734.10 million 24-hour total trade.
Due to the sluggish momentum exhibited in the virtual coin exchanges around the world, all other smaller cryptocurrencies took a fall. Crypto investors should proceed with caution, according to market watchers, because the situation is still turbulent.
Navigating the cryptocurrency world needs talent and an awareness of the market's nuances, as well as a high level of risk.
Now, let’s discuss some of the big problems that cryptocurrencies are facing
1. Regulation by the Government is Unavoidable
Investors and speculators are keeping a close eye on worldwide events as governments respond to cryptocurrencies in a variety of ways, ranging from hostile to apathetic. Christine Lagarde, the head of the International Monetary Fund, indicated that regulatory action on cryptocurrencies is 'inevitable' internationally.
2. According to a report by CoinDesk, international leaders gathered in late January for the Davos World Economic Forum, with several of them having the same attitude, including French President Emmanuel Macron, UK Prime Minister Theresa May, and US Treasury Secretary Steven Mnuchin. South Korea is said to have just banned anonymous Bitcoin and other digital currency trading, but it asserts that it has no plans to restrict cryptocurrency exchanges.
3. Inheritance Problem
This problem is frequently disregarded. Because Bitcoin is unregulated, if you don't have the keys to examine a relative's digital wallet, you won't be able to access their cash once they pass away.
To give you an example, five years ago, Matthew Moody died while on an observational flight, and he was mining Bitcoin at the time. Michael Moody, his father, has spent the last three years trying to figure out how many bitcoins his son has and where they are. He can't find every bit of the coin since he doesn't know every single address. Since then, Moody has urged for further education on how to ensure that Bitcoin miners' assets are appropriately protected. I'm sure you already know what comes next.
4. Risk of Security
Because Bitcoin exchanges are digital, they are accessible to hackers, system failures, and viruses. Hackers can acquire access to thousands of accounts and digital wallets where cryptocurrencies are stored by targeting and hacking a cryptocurrency exchange.
5. Market Risk: That’s Causing Such a Stir
The value of cryptocurrencies, like any other investment, might vary. This is not surprising. Due to a large number of informal and amateur investors, they've seen wild fluctuations in value and significant sensitivity to news in such a short time. Bitcoin and other cryptocurrencies may lose value if resistance to their adoption persists.
Professionals, entrepreneurs, and aspiring investors will continue to gamble about cryptocurrency's future. All we can say for certain is that it will be an exciting voyage.
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