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What Caused the Crypto Crash?

crypto-crash

The way that investment and wealth generation work in the modern world is interesting. We have now entered a day and age where forms of investment are no longer limited to just tangible products, but instead, can include products that have been created and exist purely digitally and within the online world.

In fact, with the rise in crypto, web3, and NFTs, there has never been an easier time to own property that purely exists online. The development of this space means that crypto has never been as popular as it currently is.

The Increased Popularity of Crypto 

Due to the above, not to mention as a result of the wealth generated from crypto and the various forms of cryptocurrency available, there has been a clear rise in the overall popularity of crypto. That being said, there is still hesitation surrounding investment in crypto due to the fact the market is perceived by many people to be unpredictable and somewhat difficult to feel comfortable with.

These concerns are fair given the crypto crash that happened recently. That being said, this element alone shouldn’t put you off investing, as like all investments, when you get involved, there are benefits and potential risks. The best way to move forward is to understand what caused the crypto crash and then keep this information in mind moving forward.

The Causes 

The Luna Terra Crash

There was a pre-emptive crash in Luna Terra, which massively contributed to the overall situation. As a reaction to the crash, Terraform Labs decided to sell all their Bitcoin reserves, and in doing this, wiped $40 billion from the market.

The Equity Market

There is a direct link between the equity and crypto market, so when a downtrend was witnessed within the stock market, this was reflected in the crypto. It means that to stay on top of the crypto market, you also need to be aware of what is happening in the stock market.

A rise in Interest Rates

There has been a steady increase in the interest rate and, as such, once again, the stock market suffered a downfall. This was reflected in the crypto market for the same reasons discussed above.

What Can You Do to Prevent It? 

As you can tell from the above, the factors that caused the crypto crash are all a little bit out of your control. That being said, what isn’t out of your control is the way that you deal with your crypto so that you don’t lose so much.

One of the best things that you can do to keep one step ahead is to always stay on top of everything that is happening within the market. Essentially, you should be sure to regularly check out crypto conversion websites, such as okx, so that you can easily stay on top of the current value of coins, such as Bitcoin, and what kind of trajectory they are on. If you stay on top of this, then you should be able to confidently buy and sell at the right time.

Conclusion 

The crypto market is incredibly popular now and, as such, you may want to get involved but remain concerned about the unpredictability that surrounds such a market. You shouldn’t let the previous crash deter you, as the circumstances leading to it are detailed above and, as such, if you remain aware of these when progressing, you’ll be in a much better position when buying and selling to avoid a loss. 

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