Hey! Yesterday we witnessed one of the most abrupt collapses in the history of the young crypto market and the reasons are different, you could almost define the current situation as "bad timing".
Let's try to list, in order, the causes of this sudden and drastic collapse:
Elon Musk
First of all, as we all know, to demoralize the markets there initially thought Elon Musk last week, abandoning after just a month, momentarily, Bitcoin as a method of payment for his Tesla asserting that it is not "green" enough.
China's Crypto Ban [FUD]
Then, numerous newspapers, and not, have shared the news (later categorized as FUD, fear, uncertainty and doubt) of an imminent ban by the Chinese authorities of many tokens and cryptocurrencies, including of course Bitcoin. The reality, very distorted, is that the Chinese central bank has only communicated that it considers cryptocurrencies as a purely speculative asset class, lacking the usefulness of fiat currencies.
Christine Lagarde
The third blow was given by the heavy statements of Christine Lagarde who did not hold back from saying that Bitcoin and Ethereum are not cryptocurrencies but cryptoassets and that investors must "be ready to see them go to zero".
Truth behind USDT
The fourth point, as important as it is, we find in the publication of the Financial Statements of the Tether Company, responsible for the issuance of the digital dollar par excellence (USDT), by far the most traded crypto in the world. The value of USDT is such because every dollar is supposed to have its own countervalue in Tether's coffers: it turns out that only 3% of that countervalue is in dollars, with what many say is a "worrying" presence of rather risky securities in Tether's portfolio.
Flash Cash and Exchanges
Finally, the devastating effect of the Flash Crash that hit the crypto market, has directly to do with the leverage that Exchanges allow you to use: by borrowing money from the exchange platform, you can in fact amplify your earnings in case a token increases in price, but there is also the possibility that if an asset loses value, your position will be automatically liquidated to pay the debt incurred with the Exchange used.
In your opinion, will there be an end to this drastic descent?
What will be the reasons for a new crypto recovery?
Let me know in the comment section below! Bye! ??
Sources:- Images : Google Search
- Informations : internet
