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A fair question being asked by millions of people is "why cryptocurrencies crash?".
Obviously, we have witnessed markets going crazy, economies falling and rising again, but could this still happen to a Cryptocurrency as well?
And the fairer answer is “Yes” - like any other financial asset, cryptocurrencies can also fluctuate as global markets define them over time.
But we are more specifically talking about Bitcoin, the oldest and the most famous cryptocurrency the market has ever witnessed. Here are a few reasons why Bitcoin like other cryptocurrencies can crash from time to time and experience significant downside moves. But don’t get confused, rise and falls are a natural part of every asset. We are only going to show the most usual reasons why cryptocurrencies can experience similar moves from time to time.
But remember, these moves to the downside only bring more profitable opportunities for long-term investors in cryptocurrencies.
1. Regulatory Conundrums
Regulations imposed by various regions and countries have been both a blessing and a curse for the crypto market. Blessing in a sense that investors feel more safe trading/buying cryptocurrency using secured peer to peer encrypted channels.
But the most hideous outcome has been the ultimate ban imposed by various nations against cryptocurrencies. Especially when Bitcoin is banned from various countries, and people/investors can't reach out. That has been a massive problem in controlling the e-business upon which businessman and investors rely on, and they have been pushed to move their business elsewhere. That is a massive blow.
2. Crypto Exchanges
The highest price of bitcoin which was listed in between $18000-$19500 in December 2017, has not been the same and continues to divert its course of action. Bearish and Bullish trends changing in a matter of minutes, hours and days justify the ultimate uncertainty around the price of bitcoin. But this brings great opportunities for trading the different cryptocurrencies.
Yet some Crypto Exchanges fail to validate a steady price chart for the cryptocurrencies, these uncertainties can change to low motivation and ultimately neglection among the investors. Some low-quality crypto exchanges do not provide a representable cause for investing in the cryptocurrencies. Which leads to the ultimate failure of the crypto world in the eyes of some investors – which is a huge shame.
But the solution to this is to choose professional and reliable crypto exchanges to trade with.
3. Competition / Rivalry
One of the reasons for such downsizing in the bitcoin value can be its competitors or rivalry. Since its launch, many more Cryptocurrencies have been launched following the exact same system which bitcoin offers. Various examples include;
- Ethereum
- Ripple
- Litecoin
- ZCash
- Dash
Ethereum being bitcoin’s primary contender has really pushed the further sales of bitcoin. The more authentic reason for this surge is the provision of extraordinary services, cyber-security, and more stability to the clients.
No doubt, bitcoin offers the most stable and hack-free system, but when it comes to stability of price in the market it can sometimes become sort of unpredictable for some inexperienced and beginning investors. And for sure, investors don't enjoy investing blindly without care for their future revenues.
This is why I’m sharing here my the most profitable crypto trading strategies - which performing excellently in real conditions. These trading strategies should help you to make nice profits in the cryptocurrency market more easily.
4. Uncertainty
People and investors always want substantial proof of their investment being returned with a profit. This is the only fair assumption to be made when investing in something in the first place. But the Cryptocurrency market is always about uncertainty, no prediction is authentic enough to dictate the next price bundles of any cryptocurrency.
That is why many investors don’t dive in this investment and it proves to be a detrimental fact about the downsizing of bitcoin, but those who know what they are getting themselves and know the risks can also receive fruits that come with it.
These were the main reasons why cryptocurrencies have experienced short-term crashes in the past. The net worth of all crypto networks combined can fluctuate greatly as the prices of cryptocurrencies fluctuate in the short-term. This is a blow below the belt, but many analysts and financial investors have already seen that coming.
Only time will tell us, but in the long-term, cryptocurrencies still have a huge potential to grow.
