The cryptocurrency industry just got hit with another problem. The cryptocurrency market has lost a lot of value in the past day because bitcoin prices have dropped by almost $2,000. In the last few hours, the total value of all cryptocurrencies on the market has dropped by more than $100 billion and is dangerously close to dropping below $1 trillion. As expected, this has changed how the market feels, making people more worried.
Due to all the talk about the Ethereum Merge, the cryptocurrency market has started to show signs of life. But since people are no longer shocked by the situation, prices on the market have started to drop significantly. The last time the economy improved, bitcoin was worth $25,000 at its peak. But almost all of those gains have been lost since then.
When bitcoin started going up, the cryptocurrency market began to feel better. At its highest, the Fear and Greed Index scored 42. In the last four months, it had never been higher than this. This came dangerously close to greed, but the market had other ideas.
When the price of bitcoin dropped below $22,000, people’s feelings about the market changed immediately. At the end of Thursday, it had a low score of 30, which put it back into the fear zone.
Due to the return of fear in the industry, investors are being more careful about putting their money in the cryptocurrency market. There were signs last week that professional traders were sick of the market. Because of this, the rates for getting money to buy bitcoin fell below the neutral level. Now, most people on the market are starting to behave the same way.
Is there more demand for digital currencies?
Since the market is just starting to return to where it was before, the correction is likely not over yet. Corrections like this are expected when the market grows so fast in such a short amount of time. This helps prices get closer to where they should be, based on how the market is doing.
This shows that the price of bitcoin could still drop in the future. Bears will try to test the support because they think the bottom is at $17,600. So, they will try to test the support at this point. History shows that moves like those made in the past during bear markets are likely to work again.
Also, it’s the weekend, usually when people have less money to spend. This means that the bitcoin price will likely keep dropping through the weekend. If the price of Bitcoin goes below $21,000, the total market value of all cryptocurrencies will be less than $1 trillion.
What does this price drop mean for people who have invested in cryptocurrencies?
If you want to invest in cryptocurrencies for the long term and use a “buy and hold” strategy, you should be prepared for price changes. Humphrey Yang, who runs the personal finance blog Humphrey Talks, says that when the market drops, he doesn’t look at his accounts because it’s hard to know what will happen. He also says that people shouldn’t worry too much about big drops. Check out trading bot if you are considering trading or investing in cryptocurrencies.
Most experts say you shouldn’t put more than 5 per cent of your total portfolio into cryptocurrencies. Bill Noble, the chief technical analyst at Token Metrics, an analytics platform for cryptocurrencies, says that if you’ve done that, you don’t have to worry about the swings because they will keep happening.
If a significant drop like this worries you, you might have put too much on your cryptocurrency assets.But even if the drop has made you rethink how you invest your crypto assets, you should still follow the same advice: don’t be hasty or change your plan too quickly.
Think about what you might feel more comfortable doing in the future, such as putting less money into cryptocurrencies or buying blockchain-related stocks and funds instead of buying bitcoin directly.