Big Reasons why the Crypto Market Keeps on Crashing 2021

REASON WHY CRYPTO KEEPS CRASHING

In this article I will explain why the market keeps on crashing, some people call it a crash, some people call it a dip, some people call it a correction and others they call it a bubble. Either way the crypto markets are volatile they're different. There's a lot of reasons why the crypto markets fluctuate so much why it's quote unquote crashing and it's really good to know these because it helps you psychologically just understand the ebbs and flows of the entire crypto market.

Big Reasons why the Crypto Market Keeps on Crashing

The first thing that you should know is market confidence and sentiment and whether you like it or not, Bitcoin is a major player in this. That's right, Bitcoin does in fact control market confidence and sentiment to some degree, it's noticeable, why? well the main reason is, I mean... think about this right just stepping back logically whenever you have a conversation with someone who's entirely new to crypto probably the first thing you're gonna have a lengthy discussion on it's gonna be Bitcoin, I mean it doesn't mean it's gonna be the first thing that you guys talk about but naturally the conversation it's inevitably gonna lead to Bitcoin. So conversationally Bitcoin tends to dominate, well that also happens in terms of market cap, financially speaking of course. So because Bitcoin is a major market leader in terms of market cap, it's literally number one in terms of how much volume there is, it naturally is also going to be a market sentiment indicator as well. So literally all eyes are on Bitcoin every type of movement whether it's long term or short term the conversation of Bitcoin, it's just unavoidable of course there's pros and cons to this but if we're really talking about the topic of crypto markets crashing, well if Bitcoin goes down then it tends to reduce the overall confidence in the crypto market. So generally speaking, if there's a bitcoin sell-off there's probably gonna be an all coin sell-off too the entire market holistically it's probably gonna be down as well. Here's the interesting thing after crashes or mini crashes, Bitcoin is expected to be one of the first coins to rebound to go up to keep rising after the crash and even if it's not, a lot of eyes, again they're gonna be monitoring Bitcoin, Bitcoin controls the market that's why a lot of bulls. People who love bitcoin they keep on saying that bitcoin is the king and of course there's people that disagree with that but if you're talking about the current state of the environment right now, Bitcoin does control a lot of it.

Here's the second thing that you should understand, Pairing, in cryptocurrency there's something called Trading Pairs or Cryptocurrency Pairs, Crypto Pairs, basically it's assets that can be traded for each other on an exchange, so if you ever see the option to have Bitcoin right, BTC and you buy something else maybe Litecoin you could see BTC/LTC what that means? is that you can buy Litecoin with Bitcoin there's a lot of other examples but essentially Bitcoin is one of the most common trading pairs, because in the very beginning you pretty much needed bitcoin to buy a whole bunch of other things anyway other all coins and if you think about it the vast majority of trading that actually occurs in the market besides the obvious fiat into crypto, it's gonna be Bitcoin with Altcoins, so what does that mean a lot of people are using Bitcoin to buy Altcoins and because that's possible right using Bitcoin to buy Altcoins it opens up a lot of different doors but it also opens up a ton of things that you also have to know as well, for example if the price of Bitcoin is stable, well technically, it can serve as a really good foundation, an ideal base to use to just buy a bunch of Altcoins that you like so in a sense Bitcoin is a financial and psychological anchor in the market, ideally most crypto investors they want both of those to go up right Bitcoin and every single all coin but the next best thing is actually to have Bitcoin be stable while having all of the all coins go up as well and then obviously if those two different scenarios keep on fluctuating back and forth in a perfect environment that's going to be a really good scenario for investors. Here's the thing though, because that's actually one of the potential scenarios that has happened and it's going to keep on happening in the future what happens when the bad stuff starts happening right, when Bitcoin starts to fall, well if they're not selling their Bitcoins then they're probably selling their Altcoins and if the markets are really bad then they sometimes convert their crypto into stable coins and if it gets even worse than that then they sometimes even cash out completely into their native fiat. There's a lot of other things besides this but this is the basic stuff that you should know right now and you can even make the argument that Ethereum is a significant trading asset as well.

The next thing you should understand is the Coupling and Decoupling. What's coupling? well generally, when the price of Bitcoin rises the price of Altcoins also rise too and then on the other side if the price of bitcoin falls then the price of altcoins are going to fall too, well what's decoupling? decoupling is basically breaking up that couple, they don't move in the same way anymore so decoupling would be an environment where all coins values move independently from Bitcoin, so an example this would be if Bitcoin falls well then Altcoins could go up because they're moving independently from each other, there's less reliance on Bitcoin i would say it kind of depends on who you ask but most people who've been investing in crypto for a while they want decoupling to happen, because not only would this allow some of the Altcoins that they're holding to move independently from Bitcoin but it would also be an indicator that the crypto industry, the entire market, it's maturing more so that's what people think is really gonna happen as the crypto market keeps on maturing more as people start to understand the utility of crypto tokens and coins, all the various options out there as the crypto startups become more mature businesses and as people actually start using the crypto coins and tokens that we just mentioned it really could be a possibility, because there's gonna be utility in the space and in real world scenarios, in the real world we're gonna be using crypto more often at least that's what people hope, because right now the crypto market's very young. Keep in mind that decentralized exchanges, they're also trying to solve this as well and a lot of other crypto exchanges they're trying to introduce more fiat pairings, this is all an attempt to move away from Bitcoin, to be less reliant on it. The other thing is it also just provides a lot of flexible options for traders which is really good for advanced traders if you're a beginner in the space if you're completely new then you're probably not going to go too deep into this.

The next thing that you should understand is Bots yes there are Crypto Trading Bots out there, by the way Bots do control the majority of stock trading on the US markets right now, if you ever see those random spikes up or down that's probably a lot of Bots just working together or working against each other, so if it's happening in the regular stock market well it's probably happening in the crypto markets too. Well I can tell you that it probably is, think about this the crypto markets are very different and here's one really big thing, crypto markets are open pretty much 24/7 versus the US stock market which generally just operates actively publicly during the weekdays, it's not going to be a lot of stuff happening on the weekends. So crypto markets being open 24/7 around the clock, well that creates a perfect environment for crypto trading bots to prosper, seriously it's a field day for Algos because there's no time blocks, they can just pretty much keep on learning a lot of AI and just get better 24/7. Depending on who you ask there's a lot of pros and cons to this, some of the people who support this they say that bots provide liquidity they provide the activity, the volume and they basically allow trading to even happen beyond the initial levels, other people don't like it because, if you kind of take this on the extreme levels it's very possible for a series of cryptobots or their movements at least, to artificially inflate prices so again if you see random flash dumps, down or up a lot of spikes, most likely that's a coordinated bot effort to screw people over, so if the bots are creating this type of activity if they keep on doing this then it can actually trigger a lot more dumps, first of all because a lot of advanced traders they have stop losses, so they want to mitigate their losses if their holdings for example fall too much 10%, then they're automatically gonna sell portion of their existing assets and then other traders who don't have those rules or conditions set up they can just manually sell off, it's just going to be a whole cascading tide downwards, which obviously isn't good because once you start adding all of that together, bots just selling off and then a lot of the conditional set up by advanced traders those being met and then just real beginners, people who may have thrown in just a few bucks in there who also see that get scared and then sell off, if all of those conditions are met that causes crashes and then guess what happens who buys the dips, usually it's the bots that trigger the initial dips as well they're creating the momentum shifts and then they just keep on creating a lot of the volatility in the market and then guess who's also part of this as well, the rich people right the whales, they're also pretty much aware of what's going on here, they buy the dips that's what causes a lot of the crashes, sometimes it happens on purpose because there's a lot of whales out there a lot of rich people who want to accumulate more Bitcoin more crypto at cheaper prices.

Last big thing that you should understand right now, the thing that causes crypto to crash is that the media has a big role in it. Basically anything that you're reading, watching, listening to being exposed to, just absorbing that can also influence you and many others. It happens so much, one day the media loves crypto, the next day they hate it, you see a pattern here and then just formally right financial institutions, the big banks they've talked about hating Bitcoin for such a long time, if you look at the news pieces, years and years ago banks have said that they hate Bitcoin it's a scam, it's going to zero and yet behind the scenes they're buying it if they're not directly buying it then they've allowed their institutional clients, the rich clients to also buy crypto. In general, a lot of wealthy people, rich people, I'm not just talking about millionaires but billionaires, they've been bashing crypto and they'll keep on bashing crypto but guess what's happening they're either directly or indirectly involved in crypto back then or they're just getting into it right now. Some of the billionaires may have even invested in startups, companies, projects that are actually associated with crypto and then the news outlets don't help either, they'll say forget Bitcoin or Ethereum buy this instead, maybe you're not clicking on that or maybe you are just out of curiosity but you just don't follow the advice there, but the other people right 99% of the people who have no idea about the financial markets they're the ones clicking on that and then they get influenced and that does influence the market, it makes the people who were gonna buy crypto not by crypto.

So hopefully that helps you understand a little bit why crypto keeps quote-unquote crashing. Don't forget to like this article for me, also take note that I'm not forcing you to invest in any crypto project. It's 100% your personal decision.

Thanks for reading!