What It Means To Have A Global Crypto Crash
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Investment in cryptocurrency or using cryptocurreny is one of the most skeptical decisions for investors or consumers.
Cryptocurrency being a revolutionary instrument of transaction, has been unspecified to almost more than 90 % of the Americans or Brazilians. However, India ranks highest with around 67% trust of retail investors.
Despite bans of cryptocurrency in several countries, it mostly excites the Gen Z for taking initiative of an impulsive investment rather than confining with the traditional assets.
Importance of Cryptocurrency
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Blockchain based platform of cryptocurrency provides completely decentralised and peer-to-peer network for security and privacy. By the term crytpo means secured or concealed and currency is a widely accepted means of transaction.
Bitcoin's structure is very ingenious. The paper money disappears, and crypto-currencies are a much better way to transfer values than a piece of paper, that's for sure.
As quoted by Elon Musk.
Instilling the paramount importance of anonymity, cryptocurrency has paved it's way of acceptance by large banks who are now spending to develop their own counterparts.
JP Morgan is currently looking forward to invest trillions in the DeFi (Decentralised Finance) industry as it believes to have uncovered a way for the developers to profit from the yield-generating potential of non-crypto assets. As stated by Tyrone Lobban, who leads J.P. Morgan's firm-wide Blockchain Program,
Over time, we think tokenizing U.S. Treasurys or money market fund shares, for example, means these could all potentially be used as collateral in DeFi pools. The overall goal is to bring these trillions of dollars of assets into DeFi, so that we can use these new mechanisms for trading, borrowing [and] lending, but with the scale of institutional assets.
Global Crypto Crashes To Determine Sentiments
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Globally, the crypto market has crashed to $868 billion as on 2nd July, comapred to the previous day's $896 billion. However, considering the global pandemic year of 2020, it has acknowledged an annualized return of more than 85 % which further establishes the sweetness of a long term holding.
Such signifies that crypto crash does not necessarily mean an end to the cryptocurrency or an upcoming future of doom to it.
There are several underline sentiments behind the global crypto crash. Some of the major ones to affect the global market may be listed as :
- Data breach at OpenSea, which is one of the largest NFT marketplace, has led to a fear on crypto security. An employee has discovered that the email management platform, Customer.io, has leaked the customer data to a third party.
- War in Ukraine has a detrimental effect on the sentiments which led to the crypto crash. Investors would prefer safe havens or in secured deposits rather than volatile instuments like cryptocurrencies or stocks. Thus people's sentiments towards the continuing turmoil has a high impact on the crypto market.
- Highest peak of inflation is one of the reasons according to the research by CNBC. As inflation refers to the increased availability of liquidity in the hand of the consumers, such further rises the prices of goods & services. Thus the amount of good which can be purchased by a dollar decreases. Such hurts the sentiments of the investors which has led to a decrease in the demand of crypo investments.
Since Nov 2021, sentiment has changed drastically given the Fed rate hikes and inflation management. We're also potentially looking at a recession given the FED may need to finally tackle the demand side to manage inflation.
As quoted by the vice president of corporate development and international at crypto exchange Luno.
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