Every disruptive innovation takes its time to establish itself in the marketplace and in the minds of people. When the internet was made available to the public in 1993, people took their time to understand the mechanisms and the actual benefits of it in daily lives. Many researchers had predicted in the 1960s that there will be a technology in the future that will enable people to communicate with each other no matter the geographical location.
Such a disruptive innovation was founded in 2008 and was called cryptocurrency; a decentralized digital currency that acts as a medium of exchange with the help of computer network.
Today, many cryptocurrencies including Bitcoin are showing an immense crash in value. As it observed a loss of $2 trillion in value in June 2022, cryptocurrencies are still struggling to recover from that massive decline. Many investors and crypto enthusiasts believe that the value of crypto will boost up soon enough for the world to use its benefits in the future.
However, why is it that the crypto market is dipping this year? Let us find out.
Stock market
Whenever there is a decline in the stock market, investors see the same effect on cryptocurrencies as well. This year and the previous year, crypto market witnessed a similar fate as the stock market, resulting in cryptocurrencies such as Bitcoin’s value to decline along with tech stocks. Even though crypto market performs independently with its decentralized system and blockchain technology, it does rely on global financial market.
As far as investors have studied, there are multiple factors that affect both the stock market and the crypto market. Factors such as supply, demand, investing decisions, economic situations, global politics etc., affect the stock market and crypto market as well.
Crypto volatility
The value of cryptocurrencies is constantly fluctuating, resulting in a massive decline in people investing in them. Investing in cryptocurrencies is highly risky and many investors, especially beginners, have lost it all due to its volatile nature. Also, the risk can increase if the investors are unable to login to crypto portal without being able to convert their cryptos into cash.
Moreover, there have been numerous crypto threats and scams that resulted in the crypto industry losing millions of dollars’ worth of cryptocurrencies. Due to this very reason, the number of investments made on cryptocurrencies started declining.
Interest rates
As the interest rates and cost of living rise, investors are more stringent with their spending and purchasing behavior. Due to the lack of funds and having a limited number of further investments plans, many are choosing to stall their investment in cryptocurrencies at the moment. Also, as the crypto market is unpredictable, investors are being mindful of their decisions at a time when there is a global financial crunch.
Conclusion
Crypto market has always come to its stable position in the previous years as well. To bring the market back to its soaring state, more investors need to invest in it and hold on to the current cryptocurrencies to reap the benefits as soon as the market rises again. As the market is witnessing a crash at the current time, some crypto enthusiasts are investing in those cryptocurrencies that are continuing to decline, hoping to see a good pump soon.
