The crypto market is witnessing a bear phase where experts are assessing over $1 trillion lost in crypto market capitalization since April 2022. With Bitcoin trading at $30,000, 55% below its high in November 2021, and Ethereum plunging to $1900 in May 2022, the crypto world is bracing for a bearish downturn. As per crypto expert vEmpire, the pessimistic outlook in the crypto market is driving a significant erosion of investors’ money. vEmpire shares insights on the current crypto market and lists three key factors driving the bear trap.
1. Fear of the Future
The downward trend is mainly driven due to panic amongst crypto investors. “Cryptocurrencies are sliding as investors want to withdraw their funds due to the fear of the future,” says vEmpire. From bitcoin and Ethereum to dogecoin, there is a downward trend that signifies a prevalent panic amongst investors. Quick withdrawals and sell-offs add to the bearish market sentiment.
2. Policy Tightening
Last year, the Chinese government’s ban on all crypto operations led to a large pull-out of investment from the global crypto market. Amid arguments to curtail financial instability and keep capital controls, the country made all cryptocurrency transactions illegal in September 2021. Bitcoin began losing its sheen after November 2021 and failed to recover to date. “Similarly, many countries across the globe, including the US, are introducing state controls and policy tightening on cryptocurrencies that are further fuelling the downward trend,” adds vEmpire.
3. Market Volatility
“Cryptocurrencies are more volatile than traditional markets. There is high risk and reward involved when dealing with crypto,” shares vEmpire. Long-term investors do not pay heed to charts during volatile markets, as they know bull runs usually follow bear traps. vEmpire warns against buying or selling cryptocurrencies too fast when the market is volatile. “Cryptocurrencies are highly volatile and thrive on assumptions. History has it; even tweets from influential handles can make or break a cryptocurrency,” concludes vEmpire