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Crypto market crash hits over $2 trillion: Read more to know if it is good time to invest in cryptocurrency

The cryptocurrency market has taken a major blow this year, shedding more than $2 trillion in value. In November 2021, the crypto hit $3 trillion. The market, however, has seen its worst first half year ever after falling by more than 60% in only eight months to approximately $920 billion. Is it a good time to invest now that cryptocurrency is at lows last seen in 2020?

Besides the significant sell-off, numerous crypto funds and platforms have also collapsed. With $25 billion of assets under custody, cryptocurrency lender Celsius. It had $167 million of cash when it declared bankruptcy last month, but its debt to its consumers was $4.7 billion.

Owning $10 billion in cryptocurrency, hedge firm Three Arrows Capital (3AC) has had its holdings blocked by a federal bankruptcy court. In recent weeks, Voyager Digital, another well-known lending site with 3.5 million users, also declared bankruptcy.

Employees have also been impacted by the fall of the cryptocurrency. In the past month, Coinbase terminated the employment of 1,180 workers or about a quarter of its staff. Similar actions have been taken by other cryptocurrency companies including Gemini, Crypto.com, BlockFi, Bitpanda, and OpenSea, who have reduced 5% to 20% of their workforces or announced a recruiting freeze.

The crypto meltdown may be over

Many are referring to the current state of the cryptocurrency market as a “crypto winter.” A prolonged stretch of reduced prices is known as a crypto winter. Sentiments on crypto aren’t the only thing declining. This year, the S&P 500 had a decline of more than 20% at one point, which is considered bearish market territory.

The recent GDP data show that the U.S. economy shrank in Q2 for the second straight quarter. The typical sign of a downturn is two consecutive quarters of GDP decrease. The downturn has been made worse by the war in Ukraine, high prices, and supply-chain problems. The crypto market has also been influenced by the Fed rate increases.

Is it a good time to buy crypto?

It is difficult to predict when it will reach the bottom, just as with any investment. When price drops are brief and prices are expected to increase in the long run, buying the dip is a wise investment strategy. Cryptocurrency values may change quickly either way, as the market has seen over the last five years.

A strategy to purchase the drop without taking on too much risk is dollar-cost averaging (DCA). Whatever the price, DCA always purchases a certain dollar amount on a regular basis. By doing so, you can purchase more shares when prices are low and less shares when prices are high. DCA is a useful method for avoiding irrational market timing and emotional investment.

It’s important to consider your risk tolerance and long-term objectives while investing in cryptocurrencies. Putting all of your eggs in one basket is not a good idea because prices might continue to decline. You may spread your risk across many asset types by diversifying. While there are chances to purchase while prices are low, there is no assurance that they will rise again.

Numerous tales exist of cryptocurrency speculators who have lost their whole life savings in this collapse. Finding the ideal financial portfolio that will enable you to achieve your objectives without incurring unneeded risks should be your main priority.

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