In the second week of May 2022, the price of Bitcoin plummeted, falling temporarily below $30,000 for the first time since July 2021. Surprisingly, the biggest cryptocurrency in the world is currently worth less than half of what it was last autumn.

Along with Bitcoin, cryptocurrencies such as Ethereum (ETH) and Binance Coin (BNB) have seen similar declines, and trading volumes on key exchanges have decreased. Major crypto exchanges have all seen a decline in trading activity. Therefore, it is important not only to follow the DENT Coin price prediction and other cryptocurrencies but also to study the analyses.

Why Is the Crypto Market Declining?

The current collapse of Bitcoin and other cryptocurrencies is the result of a combination of short- and long-term factors, such as larger financial markets and the failure of a major stablecoin.

The following are the reasons why.

As a result of the US Federal Reserve’s pledge to lower the country’s $9 trillion debt load, investors and institutions have paused trading.

Given the global slump of equities and commodities markets, the crypto markets suffer the same challenges. The trend may have a brief duration. There may not be a terrible moment to invest in cryptocurrencies.

There seems to be no crypto-specific explanation for the current downward spiral in cryptocurrency values. The Federal Reserve’s interest rate hike should be seen as the direct cause of the collapse, but larger financial and economic variables, such as the Russia-Ukraine War conflict and supply chain issues, should also be considered when assessing the future picture.

Due to the current calamity involving Stablecoin, the market has consistently declined. UST – Terra USD plummeted more than 80% on Wednesday due to the algorithmic Stablecoin de-pegging incident involving UST (Terra USD).

The success of the Terra ecosystem is contingent on the use of UST as a Stablecoin, hence the LUNA token and UST are inextricably tied. The recent loss of UST’s dollar peg sent shockwaves across the crypto industry, as it demonstrated the weakness of algorithm-backed Stablecoins. Yesterday, UST reached a low of $0.60 due to higher liquidations prompted by macromarket instability. This precipitated a significant sell-off in LUNA, resulting in one of the largest price decreases in LUNA’s history and consequences.

According to statistics from Coinmarketcap.com, Bitcoin has dropped 19.9% over the last week. During the same time, Ethereum decreased by 16.75 percent, while BNB decreased by 5.73 percent.

Additionally, the price of any asset relies on the demand from new investors. With indications of rules in some form and the establishment of the central bank digital currency (CBDC), institutional investors are adopting a wait-and-see strategy to see whether significant changes will result from government declarations.

Trade volume and investments have not increased, despite the ongoing growth of retail investor interest and sentiment throughout the globe. This is because individuals seem to be prepared for a globally visible market meltdown. Therefore, they are more inclined to invest in secure assets as opposed to high-risk, high-return asset classes such as cryptocurrencies.

How Should Investors Proceed?

Experts on the crypto market have recommended observing the kp3r price prediction and other cryptocurrencies you are interested in moving cautiously rather than making rash purchases.

Do not bet the farm now. Instead, continue averaging your investments in blue-chip cryptocurrencies. 

By admin