Cause of the Crypto Crash: Why the Crypto World Crashes and Recessions

The recent crash of cryptocurrencies has been largely blamed on central banks around the world due to their tight monetary policy to fight inflation and liquidity. Nevertheless, every sharp drop in cryptocurrencies shakes the crypto investor but some investors still think that some buyers are waiting for the dip which will surely reduce the losses of bitcoin in the future.

Cause of the Crypto Crash: Why the Crypto World Crashes and Recessions
Cause of the Crypto Crash: Why the Crypto World Crashes and Recessions

The recent lowest bitcoin price greatly affects mining business worldwide, with higher prices generally encouraging more people to buy miners as the rewards are bigger and higher than the electricity bill. Currently, the massive crash invites not just the price of bitcoin to hit eventual peaks but simply drive up energy bills. It is believed by digital currency economists that when the price stays above $25,000, more people can start mining. If prices fall below the $25,000 threshold, miners may be prompted to suspend operations or reduce mining because they do not want to risk spending more on electricity than on mining new coins. .

It is clear that a super crash hit the cryptocurrency world and profoundly affected the direction of the encrypted world, with no small popular coin or major coin left from this crash. While the tide of uncertainty has subsided, and the enthusiasm of crypto speculators has waned, one thing is clear during this stormy period when the storm calms down and we must re-examine the impact of this crisis.

Furthermore, the recent crash in the crypto world has caused the price of every coin to fluctuate greatly, with many coins before the crash serving as a means of payment and a store of value, but now as another alternative asset. It is difficult for even major encrypted coins such as bitcoin and ethereum to play any role in the economy.

Prior to this crash, many believed that the one and only problem with encrypted assets was how technically probable an encrypted token is. Because before the crash it is difficult for investors to determine the value of encrypted assets. Ultimately, the value of a cryptocurrency is about how much people think it should be worth, how people regard them as important assets, and how it will affect society.

This crash justifies several shortcomings in the encrypted world, such as limited understanding of the fundamentals of cryptocurrencies, lack of adequate liquidity in the market, and that most cryptocurrencies are still early concepts of real-world applications and there is much development and need for Energy is required. Transforming into a valuable currency system.

Many investors are still confused in determining the potential of cryptocurrencies and assessing the true value of specific cryptocurrencies and tokens. Maybe the crash will give the encrypted world the idea of ​​a unified global regulatory system for cryptocurrencies as the crypto world will need a management license in every country, the huge gap between government regulations around the world and the crypto world already for the whole. creates many problems. crypto world.

In the end, it sounds like a strange statement but according to Buffett about cryptocurrencies: “Next year or next 5 or 10 years, whether its price rises or falls, one thing I am sure is that it will not generate any value. There is a kind of magic in it and people used to give magic to many things.”

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