The crypto market has faced increasing pressure recently, from the severe market crash in 2022 due to the global rate tightening, up to the massive loss of investors’ funds due to various exchange failures, and finally market uncertainty and increased volatility in 2023 due to the regulatory sanctions on major crypto exchanges for bridging the regulatory laws and manipulating the market with false trading volume claims. Amidst the pressure pile up on crypto, investors have been beset in taking decisions on whether it is the right time to bow out of the market or to hope for a promising future. This article has examined the different pressures that crypto traders are beset with currently to determine if it is a good time to bow out of the market.
Recent Pile Up of Pressure on Crypto
Severe Market Crash in 2022:
The crypto market was subjected to a bear season in 2022, which saw a severe market crash from the all-time highs created the previous year. Bitcoin, for instance, tumbled to a new low at $15476 from its all-time high reached at $69000. Altcoins suffered the same fate with many losing over 90% of their values during this period. While the market has shown signs of recovery since then, the memory of such a dramatic decline continues to cast a shadow over the crypto industry, especially as the rate tightening which has caused this crash has not fully been halted.
Exchange Failures and Bankruptcies:
Another significant factor contributing to the pile-up pressure on the crypto market is the many incidences of exchange failures that have occurred recently. More than eight different crypto exchanges have reportedly gone bankrupt recently due to mismanagement of investors’ funds. These incidents have eroded trust in the industry and raised concerns about the safety and reliability of crypto exchanges.
The regulatory landscape surrounding cryptocurrencies has become increasingly complex. Major crypto exchanges such as Binance and Coinbase have faced regulatory scrutiny for violating US laws and manipulating the market. The lawsuits filed against these exchanges have increased the market uncertainty and dampened the investors’ sentiments to buy Crypto in USA.
Increased Volatility and Market Uncertainty:
The troubled crypto landscape due to the factors mentioned above, has increased the market volatility and made the future of the crypto market highly uncertain. Increased volatility in the crypto market exacerbates the pressure on traders, as sudden price swings can lead to substantial gains or losses within short periods.
Considering the aforementioned pressures, the question arises:
Is it time for crypto traders to bow out of the market?
While the answer to this question ultimately rests with individual investors and their risk tolerance, there are several factors to consider before exiting the crypto market:
Cryptocurrencies are still in their nascent stage, and the market is evolving rapidly. Despite the challenges faced, some proponents believe that cryptocurrencies have the potential to revolutionize finance and offer significant growth opportunities over the long-term.
Diversifying investment portfolios is a commonly advised strategy to mitigate risk. Cryptocurrencies can be seen as a part of a well-diversified investment portfolio, alongside traditional assets such as stocks, bonds, and real estate. Investors can further spread their portfolios across different trading platforms like Capital.com and eToro Social trading platform without depending on any particular platform.
Managing risk is crucial when investing in any asset class, including cryptocurrencies. Investors should thoroughly research the projects they invest in, assess their risk tolerance, and establish clear entry and exit strategies.
The pressure on the crypto market has indeed been significant, with the market crash of 2022, exchange failures, regulatory sanctions, and increased volatility creating a challenging environment for investors. However, the decision to bow out of the market should be based on individual circumstances, risk tolerance, and long-term goals.