3 Ways to Interpret the Current Crypto Decline

Crypto decline

*This blog post is my personal opinion only and contains affiliate/referral links.

After a mind boggling growth that started last year, we are now seeing the downward slip of the crypto market. Did we lose the enthusiasm already and are we now in the midst of panic and fear?

In this blog post, i like to share few thoughts on the current cypto situation. For transparency purpose, I’m not really a big crypto investor and only hold small portion on my investment portfolio. I find it interesting to follow the news though and the pulse that many investors and traders are going through right now.

China and Anonymity of Finance

China, the Asian Giant and one of the biggest economy in the world, has been tightening financial regulations on cryptocurrency, particularly Bitcoin. It has banned payments and settlement of cypto and is set to crack down trading and mining further down the road.

For a country that has a standard of anonimity on many of its finances, tightening their crypto regulation is a way to protect their financial system. This week alone, Bitcoin has plunged more than 30% in a global sell off. Time will tell if cryptos volatility will continue to creep and discourage other econimies and if this China move will have a serious impact on the future of cryptocurrency in general.

Energy and Mining

The China drama has deep implications on the world of cryptocurrency mining. China is in the very forefront of mining. It has been reported that more than 6o% of cypto mining come from China, thus it requires massive amount of energy consumption to power this cypto mining machines.

I suppose many crypto investors and traders are not aware that the energy required to power crypto mining can have harmful effects on the environment. This glaring fact and realization led to Elon Musk suspending the payment of Bitcoin to his Tesla Motor Cars Corporation. As a result, many green and other environment conscious investors and traders may have turned back on crypto and consequently contributed to the crypto slide.

The Correction that We Have Been Waiting For

Bitcoin, Ethereum, Doge and other Alt Coins have been enjoying all time highs before this recent decline. You can look up the price history and marvel at the run this crypto coins has made, in just a year Bitcoin dashes from $9K to $63K at one point. Some may call it being on correction territory, which is healthy for any asset market.

Massive selling is the result of many triggers, and one may argue the China one is a major disruption on the growth of crypto at the moment. It’s up to the investors and traders to read between the news bylines and see if these dips are betting or buying opportunity.

Thank you for reading.

Jay

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