Ever so often, cryptocurrencies tend to take a dip in their value. Sometimes that dip is more like a downfall rather than a fluctuation. Under such circumstances, it can be hard to predict the recovery time for the digital coins. Here, we’ll tell you everything you need to know on why and when will crypto market recover.
The recovery of the market depends on various factors such as mining rate, investors’ enthusiasm, and third-party dependency. So, the market is likely to rise back to its glory only when these roles will play out hand in hand.
Why Did The Crypto Market Crash In The First Place?
There are countless stories of people making millions off of only a few thousand dollar investments on the internet. These people struck gold early in the crypto game before the digital currency values started to soar high. But what goes up must come down, and so was the case for this market as well. Here are a few examples-
By the end of 2017, Bitcoin traded for above $19,000 (the then all-time high). Fast forward a few months later into 2018, the label dropped to $13,800 and further down to less than $3,500. This happened because many investors unknowingly initiated a domino effect in the market by conducting mass sell-offs.
Since most cryptocurrencies are correlated to each other, so are their prices. Soon after this incident, the other cryptocurrencies followed the pattern and dived themselves downwards as well.
Many experts blame mining breaks for such falls in the market. A huge proportion of mining is located in China. As a result, a large-scale power outage in that region contributed to the crash.
Since the market is quite volatile, even rumors can bring about big changes. Such as the time when there were rumors of the US Treasury department pressing charges against the organizations. Reason – Criminals were taking undue advantage of the unregulated market through money laundering.
When Will Crypto Market Recover?
If you’re contemplating on whether you should hold onto your investments or sell them off, this section is supposed to help you a lot. Remember that our purpose is not to ask you to buy or sell. Rather we intend on making you understand the market better so that you can make that decision for yourself
It’s quite difficult to answer this question without addressing the ambiguity that comes with it. The crypto market is recovering every day. It’s on recovery even when investors are incurring a loss. Yes, you read that right. So, the matter eventually comes down to whether the rate of recovery satisfactory enough or not.
When the recovery rate is substantial for initiating and retaining future investments, only then will the market recover. This is also what is happening in the market now. Although the pace is slow, it is gradual and consistent.
A huge uproar in the market is predicted as many people consider Bitcoins, Ethereum, and Dogecoins as healthy retirement plans. However, nobody can say for sure if this rate will stay put as there are many variables attached to it.
People tend to branch out from cryptocurrencies to other modes of investment as they find the volatility intimidating. But an improvement in mining always brings forth more liquidity. The market is also likely to recover fast when more courageous and strategic investors enter the game.
Should I Cash Out My Investments Or Stay Put?
Many potential investors or miners are wondering whether to cash out or invest more. If the prices are low, then it’s probably a good time to step into the crypto market. However, make sure you take a look at whether the prices are likely to stay down for a long time or not.
If the coast is clear, then we suggest dividing your budget into four equal fragments. Then, consider buying your way in at four different points of time. That way, you’ll be able to minimize the risks involved.
Lastly, remember that cryptocurrencies are potentially the future of all financial transactions. This sort of reputation was not built in a day and won’t disappear overnight either. So consider sticking to the market unless you identify the volatility of the market as a jeopardy to your investments.
Frequently Asked Questions
1. Can cryptocurrency be regulated?
As of April 2021, there are no regulatory bodies for cryptocurrencies. No authority has introduced such a framework to limit or regulate the currency’s value. This is why many investors tend to overlook Forex and stock trading for mining/trading cryptos.
2. What determines the price of cryptocurrency?
Mainly the supply-demand deficit of a certain currency determines its price. The overall market demand and availability of digital currency also play a huge role. Lastly, other competing cryptocurrencies also play a role in the price label.
3. Should I invest in cryptocurrencies or stocks?
The answer to this question largely depends on your lenience to investment. Your budget and risk-taking endeavors also affect the outcomes of such investments. However, among the two sectors, the cryptocurrency market has more volatility than the stock market.
4. How expensive can Bitcoin get?
Bitcoin began circulation in the market in 2009, and the price has bumped up by several notches in recent years. According to Coin Metrics (April 13, 2021), the currency achieved its all-time high, a little above $63,000.
‘Investing Smart’ Is Better Than ‘Investing A Lot’
We urge our readers to invest only when the wheels are turning. And not necessarily when the prices are low. Our goal was to deliver that risk calculation and budget determination are two of the most important combos for an investor.
Congratulations! Now you have a concise idea of when will crypto market recover. If you’ve read through the entire article, then you’re off to a great start already. Good luck with all your future investments and endeavors!