Why are cryptocurrencies crashing

6 min read

Cryptocurrencies crash due to a large number of factors, whether from a news story that tells us that some crypto has been delisted by alleged fraud in its sales that this would cause a collapse in said currency but in today’s markets the trade of bitcoin is not only based on the fact that you buy and sell bitcoin with fiat money, but bitcoin can be traded with a large number of other cryptos and if any of them have a problem this causes the price to drop since all those bitcoins that were bought With said crypto create an embezzlement, and in the future that crypto can no longer be traded with bitcoin.

Another could be that a platform on which cryptocurrencies are traded is failing which can cause a panic in the public, since if you try to enter this platform and it does not let you it will set off the alarms that something bad is happening causing the public that cannot enter question whether something very bad is happening on that platform, things that can vary from a massive hack to a simple problem that causes that it cannot have more than a large number of users active at the same time.

It can also be seen that bitcoin reaches a high price which causes miners to sell large amounts of this crypto, not only the miners but also the so-called whales that are users with a great purchasing power what they do to extract a good amount of profit causing bitcoin to crash, consequently other cryptocurrencies also decline because many are based on the price of bitcoin.

If bitcoin falls, other cryptocurrencies also fall which causes a panic among some crypto buyers which causes them to sell their cryptos before losing a large amount of what they have invested in cryptos which also causes said cryptos to fall.

Also, some external effects can cause the downfall of cryptos as a global event like a pandemic or natural disaster. As well as until it is time to pay the taxes that this would mainly affect users who are in the USA, which causes users who were saving their cryptos to sell them to pay taxes.

Another factor that cryptocurrencies decline may be due to some projects failing to fulfill the promises they make to their investors, which causes a domino effect, creating a doubt in investors of this crypto, which makes them speculate that other projects suffer the same. fate caused many to withdraw and causes this crypto to decline.

Reaching one of the most feared cases would be that they hack into a large trading platform causing great losses not only in the users of said platform, but also in cryptos since a large number of cryptos increase in value depending on whether or not it is sold in said platform. Upon seeing a large number of wallets affected by the hacker and that could contain a good sum of cryptocurrencies in them, they would be sold in other markets causing a greater drop in cryptocurrencies.

causing a large amount of the final price of cryptos can be affected if that platform is hacked or if something happens that causes users to no longer trust that platform.

Why are all major cryptocurrencies falling?

In order for the largest cryptocurrencies to fall, some of the above factors must happen, but they must directly affect them, mainly hackers who steal wallets that contain large sums of said crypto, which would cause a great fall, both because of the fear it causes in users of this type of wallets or platform where this wallet is located.

This may cause users to move to other more secure wallets or sell all their cryptos before the price drops, because the hacker does not care how the market is, he only cares that It has a portfolio with a large sum of cryptos and that is profit from every point of view, causing a crash of the crypto by selling a large sum causing an increase in the offer.

This added to the other users who are afraid of this too are added to the sale causing an even greater increase in the sale offer of the crypto devaluing it at prices so low that they would surprise the faint of heart to see the large amount they lost on their investment.

As always, the trading of cryptocurrencies is subject to many changes not only because there is a lot of demand or supply can change the price, as we know this is a very volatile market that we must be very sure of before investing.

That is why we must always be informed of everything that happens in the world of cryptos every day to understand and prepare for a possible downfall due to the announcement of the discovery of a new hack, scandal in the field of cryptocurrencies or even global problems so we can prevent ourselves and ensure our investment.

Or things that we will not be able to control in time if we are not monitoring the currency 24/7 since cryptocurrencies, unlike investing in the stock market, do not close at 6 pm so it may be 3 am where you live and announce that they will carry out a hard fork in the crypto causing to indefinitely suspend the trade by and as a result would have a crash.

Cryptos have risen and fallen every day but those that are significant only happen in extreme cases after they calm down and fix things, the cryptos will continue with their usual behavior of tending to rise little by little.