Understanding the reasons for the Bitcoin downfall and deciphering the suitability of the investment.
Investing in the cryptocurrency market is not any less than, gambling on a higher scale, just that the process is completely online and real-time in nature. It never closes as the cryptocurrency market runs 24/7 throughout the year which makes it highly suitable for the day traders to analyze the investors to track the cryptocurrencies in order to make some profits from them. Trading with cryptocurrencies is an art which can be mastered with consistent practice. It is observed that many of them become millionaires by investing in the cryptocurrencies while on the other hand it is also observed that many enthusiasts have lost their previous savings by investing in the crypto. Therefore it is highly speculative and the newcomers are advised to make an extensive research about the cryptocurrency they are opting to invest in it.
Is observed carefully the cryptocurrencies undergo a constant cycle. It is observed that initially, Bitcoin leads the bullish market which is followed by the top altcoins which are in turn followed by the other lesser prominent Altcoins. Then huge corrections begin and a new floor price is set for Bitcoin and all the other altcoins as well, then there is no activity in the Crypto space for months together, until and unless another new big cryptocurrency hike is observed. Then the whole process repeats itself.
How are stock markets better than cryptocurrencies?
It is estimated that investing in the cryptocurrencies during the market fall, is the best time, as the currencies would regain the Bullish Trend. But there is a lot of difference in investing in a stock market and cryptocurrency because in stock markets the prices not only depend on the market forces of demand and supply but also the successful adoption of their product or service but in case of crypto market solely depend on the demand and supply. As the cryptocurrencies are not backed by any financial asset it is recommended on generalized terms to stay away from it.
The actual reason for the market downfall
On 8th August, the prices steeply fell and the precise reason is pointed towards the decision taken by SEC to postpone the decision regarding implementation of the Bitcoin ETF. The prices experienced almost a 6% fall within a span of 24 hours itself to attend $6300. The proposal to the SEC was the third one put forth by the investment firm, VanEck where they had rejects it’s proposals twice, before. This time they willing to consider the issue and hence probably are taking some time to decide on the matter. In simpler words, they are making sure that this would have any adverse side effects on this highly volatile crypto market.
The Bitcoin prices have fallen from an intraday of $7600 to almost $6700 approximately. However, this 6% downfall is nothing when compared to a 30 % downfall which the cryptocurrency market had experienced in April 2017, when Cameron and Tyler Winklevoss had proposed for the Bitcoin ETFs and it was rejected by the SEC. In a nutshell, this decision has even worsened the market conditions.
Is a good time to invest?
It is always observed that, after a downfall, the cryptocurrency market mostly experiences a correction and regains stability. The trend can also be applied here and hence this can be a great opportunity for the public as well as institutional investors to invest in Bitcoin and other Altcoins, as they are expected to experience a recovery and increase its value. It is not very unnatural in nature that something takes a few steps back in order to experience a giant leap and thus even holds good for the cryptocurrency space.
Although it is a great opportunity to invest in cryptocurrencies, the fact that constantly needs to be reminded of is that the cryptocurrency market is highly volatile and subject to the market conditions. An investor compulsorily needs to do an extensive background check on the project prior to investing in it. Otherwise, hasty decisions would lead to tons of losses, which is absolutely not viable in this generation which moves on the competitive edge of the technology. An investor should be able to stake the amount which he or she is OK to lose, otherwise, cryptocurrencies is not a suitable place for them.