Crash Crypto

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The Crash of Cryptocurrencies

Investing in cryptocurrencies comes with a risk of massive losses. There have been several crashes in the cryptosphere, and investors have been forced to face a difficult reality. The sudden crash of the cryptocurrency market has left many investors in shock. Some have even resorted to memes to cope with the loss. Crypto investment CEO Michael Saylor, for example, posted a picture of himself at McDonald’s, captioned “it’s over.” The phrase has become a running joke.

Luna crypto network collapsed

Terraform Labs’ CEO, Do Kwon, outlined new plans for resetting the Terra ecosystem, which mirror the proposed plan by the Terra Builders Alliance. Do Kwon suggests distributing a billion LUNA tokens to the community to rebuild the network. The new network would then be governed by the community.

The collapse of the Luna crypto network was a huge blow to the digital currency space. It destroyed $60 billion in value. Many investors were attracted to this new currency due to its stability, but a lack of liquidity caused the network to crash. Traders were hoping to exchange their UST for LUNA. However, a massive amount of UST attempted to redeem for LUNA, which pushed the on-chain swap spread up to 40%. This put extra pressure on the LUNA price, and it collapsed sharply.

Although Luna’s crash did not affect many other cryptocurrencies, it did hurt a few investors who had already invested in the crypto network. Some retail investors admitted to losing $20,000 in the crypto network, and many people who were loyal to the Luna project referred to themselves as “Lunatics” on Reddit. As a rule of thumb, investors should limit their crypto investments to five to ten percent of their portfolios. A great way to minimize your risks is to use an AI investment platform such as Q.ai to make your crypto investments.

Terra network rose to prominence

In January 2021, Terra raised a $25 million funding round, but that round quickly dried up, and the price of its tokens plunged by over 90%. In June, Terra raised a further $150 million, fueled by the backing of Pantera Capital and BlockTower Capital. These investors, including a large number of early Terra investors, are making a large bet on the future of the network.

The two founders of Terraform Labs, Do Kwon and Daniel Shin, took the project from relative obscurity in the Layer 1 space to the sixth largest crypto project by market cap within just a few months. They built their platform around a stablecoin backed by the dollar, the UST. They promised investors a 20% return each year through the Anchor Protocol, and they were able to capture the attention of leading venture capital firms. In addition, they were able to attract major institutional investors with high-yield bonds and investments in the volatile Terra token.

Bitcoin’s peaks and valleys coincide with shifts in Fed asset purchases

In the long run, Bitcoin’s peaks and valleys are correlated with shifts in Fed asset purchases, as monetary policymakers aim to keep inflation at bay by raising interest rates and tightening financing conditions. The effect of these moves is to punish speculative assets, as investors are more inclined to move into safer investments. The selloff in Bitcoin comes as central banks begin to scale back their excess liquidity measures in preparation for higher interest rates later this year.

The Fed recently published minutes, which raised eyebrows and raised concerns about inflation and interest rates. The minutes mentioned that tight labor conditions could warrant an interest rate hike earlier than expected. They also mentioned plans to reduce the size of their balance sheet.

Bitcoin’s price has tumbled more than 50% six times since its 2009 launch

Bitcoin is one of the most popular cryptocurrencies, but it’s also experienced multiple periods of price volatility. The most recent fall occurred in November 2021, and it was the result of rising interest rates and less liquidity. Many skeptics wrote Bitcoin off as a fad, and its price fell well below $4,000. However, this recent drop did not dampen investor’s enthusiasm. The mysterious inventor of Bitcoin, Satoshi Nakamoto, has remained elusive, and has yet to be identified.

During the peak of its bull run in 2017, Bitcoin’s price was nearly $20,000, but within a few months, it had dropped nearly 50%. This plunge left many questioning the safety of Bitcoin stored on exchanges. By the end of the year, Bitcoin had rebounded to an all-time high of over $1,100, and was set to hit a new all-time high of $68,789 on Nov. 10, 2021.

Bitcoin’s ‘Fear and Greed’ Index has dropped below 8

The “Fear and Greed” Index is a gauge of market sentiment and has dropped below eight, indicating extreme fear. The previous low of 8 was set on December 18, 2019. The index has fallen from last week’s reading of 17 and last month’s reading of 50. It is important to note that the index is not a perfect substitute for market analysis. Instead, it should be regarded as a supplementary tool, taking into account social signals, volume and trends to create a comprehensive picture of market sentiment.

This index measures the level of investor fear and greed in the crypto market. The higher the index score, the more fear and greed investors are expressing towards the cryptocurrency market. A low index score is indicative of room for further growth, whereas a high index score signals a potential fall. Consequently, investors should take note of this index and act accordingly to protect their capital.

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