2021-09-19
What Causes The Crypto Market Dip?
Coronavirus has created a devastating impact on our lives, the economy, and cryptocurrencies. In general, the crypto market has experienced uncertainties during these troubling times. Bitcoin price reached a peak of $ 63,576 on 14 April 2021 and hit the bottom of $ 29,971 on 21st July in the same year. After that, Bitcoin started to gain momentum but the price declined again on September 8th.
There are several reasons that caused the crypto market to plunge. Generally, these reasons are the most commonly experienced by investors.
A whale is a term in the crypto world that refers to an individual or institution that holds a massive amount of cryptocurrencies. A single movement by a whale is able to manipulate the asset's valuation.
How do whales contribute to cryptocurrencies price dip?
An example of such can be referred to the transaction on 8 September 2021, at 10:56 AM GMT+8 where 1,000 BTC amounted to around USD 47 million being transferred out from Coinbase to an unknown wallet. Such a massive amount of transfer can lead to selling pressure on retail crypto investors because they are worried about the effects of such a movement on the market. Now, imagine if the whale sells all 1,000 BTC for another coin, it reduced the price of Bitcoin and increased the price of that particular coin.
FUD is a crypto term that refers to fear, uncertainty, and doubt. It is a disinformation strategy used by marketing and sales professionals to influence the perception of audiences by spreading negative, dubious, or false information that leads to fear.
Whether it is good or bad, news can lead to a tremendous impact on price movement. For example, Elon Musk tweeted about his holding of DogeCoin. That tweet resulted in people's FOMO action into buying the coin, which then caused the price to increase.
On the other hand, the ongoing XRP lawsuit which started a long time ago has made the coin fall into a price dungeon, and it is still crawling up.
Profit taking is a movement in an investment where people are selling their assets when the price has risen in order to secure profit. This creates more supply on the market compared to demand thus, lowering the intersection point and decreasing the price.
There are many factors that could contribute to market dip. However, it is important to gain control of your emotion in order to avoid making unfortunate decisions. Correction is healthy for the market and it is unavoidable. Remember to do your own research and plan your trading strategy.
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