The performance of the market since the beginning of the year is worrying. The current price of Bitcoin is $21,195.89 ( 2022.06.21, 7:21 PM), breaking from its all-time high of over $60,000. Without a comparative flash back on previous year’s performances, we can say that Bitcoin lost over 35% of its value. Consequently, $927.16B is recorded as current cryptocurrency marketcap alongside a daily trading volume estimated at $70.07B. It calls for a billion change from its trillion market. This may sound funny to many of us, newbies, crypto traders or investors looking for a financial refuge. We go for why.
This will be a very basic analysis for those who are new to this. There is a lot of information on most of the medias.
Why is the market tanking?
To answer this question, it’s important to consider some basic perks to any economic system’ sustainability, such as users, investors’ state of mind, market conditions, and policies put in place to help the economic growth. The market functions, the offering and its methods are also included.
- Phase 1 : Economic system
Before going forward with analysis, there’s the need of understanding the market perks and the system. In mere terms, an economic system is the structure adopted by a set of institutions, societies or any organization to administer their resources (money, power, physical or working capital etc). In other terms, it’s a means by which societies or governments organize and distribute available resources, services, and goods across a geographic region or country.
To straight things out, a sustainable market economy requires a well established economy system to securely provide access to users; sellers, buyers or producers. Unfortunately, the cryptocurrency market is unregulated, which means that users have the freedom to set their own barriers without permission from the government. This is possible thanks to decentralized, smart contracts. The users are controlling the system.
A blockchain project rug pull, the founders won’t be jailed. Case study, Luna turns into dust, DO KWON, the founder won’t be jailed even though the consumers authorities will surely fill case against the project, there’s no regulation since the core system of crypto is purely decentralization. MemeCoins, Shitcoins , and ScamCoins rising as no permit.
- Phase 2 : User state of mind.
The market economy is determined by the user’s state of mind. That is to say that, there is market movement when users want to get a product in exchange for currency or their good. The purpose of purchasing a product is individual. We may have buyers who are looking to immediately sell the asset, buyers who are looking to use the asset for future purposes, and buyers who are looking to hold the asset in hopes of a future price increase.
The later is close to being fact. All market users must be above the satisfaction threshold or crossing it. The market will be influenced by user sentiment, which will determine supply and demand.
Users almost acknowledge that the risk of loss and gain is 100%. Everyone will have their own, deep convictions or philosophical perspectives this time. That’s why we have lots of influencers, crypto celebrities, etc. to infuse the need of cryptocurrencies in the economy system.
It may result in a fear of investing, resilience, or even protest, as we have seen in other economies. Henceforth, investors might exit any market if they no longer feel trust, resilience, or safety, since the risk is already too high. It will evoke a state of indecision. A confused state of mind.
- Phase 3: Market Conditions
The market conditions are the deciding factor for users’ state of mind. Because it influences the choices made by market actors. Users will buy higher than usual, pay more and get less if the economy inflates. Users will, with time, save money and refine their decision-making with the reality. Fuds, USA SEC grudges, bad mouthing of influencers, rug pulls, and other things. All together, they have a direct impact on the user’s state of mind.
The cryptocurrency market is said to have over 50% of American funds, something very alarming. For the first time in a decade, the USA records the best inflation rate estimated at 8.6% for the 12 months ended May 2022, the largest annual increase since December 1981. Americans will gradually withdraw their capital from the cryptocurrency market to cover additional expenses. The user’s state of mind will change as a result of that. Unfortunately, the market economy is affected, and no economic system is susceptible to monitor it. It’s a fluctuating market with no regulations or restrictions.
Phase 4: Market Functions and offering System
The market functions and the offering system are not separate. After crypto became a decentralized form of money, DAO came along, as a decentralized autonomous organization. Several new functions, such as DeFi and Gamefi, have since been introduced. Token supply is defined by the project creators based on sparsely defined policies. Exchange listing is based on the exchange’s preferences and analysis. The market is junked with a lot of tokens. This is significantly overshadowing the cryptocurrency market sentiments and is raising fears of loss every day.
However, that’s all about the perfect timing of the cryptocurrency market over a decade. So, you could call it the pump, dump, bear, and bull market. The unstoppable schemes.
Whether it’s a market economy, the user’s state of mind, the market conditions, or the offering system, the only thing that will drive the cryptocurrency market is hype, trust, and convictions. Those are being confused at the moment.The blockchain is here to stay and it’s at its beginning. Reach out to external sources for more information why blockchain offer a brilliant future of money. These newbies’ analysis is carried in the purpose to satify a proper will to explain things roughly. There are more facts intepreting the current crypto market conditions. This is purely individualist.