Bitcoin price is constantly plummeting as we write this post. From 58,323 EUR in November 2021, Bitcoin lost 36% of its value in just one month. On Friday, January 7, one Bitcoin valued 36,955 EUR. It’s a huge loss, and the drop doesn’t seem to end here. Crypto specialists say it’s going to drop a bit more.
But it’s not only Bitcoin. Ether and Solana prices dropped as well. So, what is happening, and why are these cryptocurrencies plummeting?
Why do cryptocurrencies fall? Energy crisis and the situation in Kazakhstan contributed
Generally speaking, it’s a matter of supply and demand. It’s the law of economics. When the volume of sales is high, the price goes down. But who is selling?
The ‘official’ explanation is that some sell incredible high volumes of cryptocurrency following the announcement of the US Reserve of a potential increase of the interest rates this year. This means the interest in the fiat guarantees is higher than the potential earnings from the cryptomarket. Besides, at the end of the year, the significant players sell crypto and buy fiat to pay the taxes.
Supposedly these led to the massive correction of the market. But is it only this?
According to another opinion, the big players on the crypto market needed this drop to buy cryptocurrencies at the lowest price possible. How do you do that?
You can help an existing dropping trend, like the one after the US Reserve announcement, by flooding the media with negative news, for an instance. Or, even better, start selling huge, ludicrous amounts of crypto to cause the market drop. Thus, you sell high, cause the market drop, after which you buy very low once again. You wait for the market to get back and sell high again. Of course, you cannot do that as an individual investor. You have to be a whale.Anne M, Hack Growth specialist at Crypto Marketing Center
Whales are those considerable players in the crypto market. Ones to possess and trade billions in cryptocurrencies.
The energy crisis and Kazakhstan’s political and social crisis helped Bitcoin fall even more than all the other cryptocurrencies.
The energy crisis hit all the crypto miners. The price of energy is now simply too high to cover most of the expenses with mining Bitcoin. On top of that, the miners who fled from China to get refugee in Kazakhstan are now deprived of internet after the turmoil hit this Asian country. This led to a drop in the global computation power of around 12%. Consequently, Bitcoin dropped significantly, 10% in just two days after the crisis occurred in the Asian state.Anne M, Hack Growth specialist at Crypto Marketing Center
As usual, the small investors take the hit each time and again. The whales are just swimming deep, only to get back to the surface when they need fresh air from time to time. Here we have another classic scenario of big investors winning over the loss of the small ones. And the bigger the sales of the small investors, the bigger the earnings of the whales.
One clever piece of advice is to wait for the market to go up again. In times like this is not a good moment to sell. Because, sooner or later, the market will recover.
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