Why crypto crash

Таков наш что могут знать участники цепочки биткоинов полезное сообщение

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Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns as of January 1, Invest better with the Motley Fool. Investing Best Accounts. Stock Market Basics. Stock Market. Industries to Invest In. Getting Started. Planning for Retirement. Retired: What Now? Personal Finance. Credit Cards. About Us. Who Is the Motley Fool? Fool Podcasts. New Ventures. Search Search:. Key Points. A cryptocurrency crash hit hard on Tuesday morning.

What happened The explosion of cryptocurrency prices seems to have come to an abrupt halt late on Monday night as a broad crypto sell-off commenced. Image source: Getty Images. Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Motley Fool Returns Market-beating stocks from our award-winning service. Stock Advisor Returns. They did so to boost its price. This freedom for investors to communicate and invest according to their beliefs, which has long been a facet of cryptocurrency markets, shows that sentiment is changing finance across the board. Currently, the ecosystem is largely populated by retail investors. However, institutional money is beginning to tap into the narrative.

But sentiment can work both ways. While crypto prices can rocket on a whim, they can also fall heavily for seemingly little or no reason. Moreover, without being pegged to a tangible value like in gold, these changes in sentiment can affect token prices in a more drastic way than their traditional stock market counterparts. The lack of legal foresight can cause confusion and, by extension, lead to price corrections.

All cryptocurrencies are built on distributed blockchain technology. While the technology is complex, its fundamental meaning is not. Blockchain technology can decentralize assets like Bitcoin and other coins. However, since blockchains are spread across many different machines, cryptocurrencies do not have a single centralized location.

Thus, it is difficult for established regulatory frameworks to control them. This is not to say that governmental regulatory efforts to stem the growth of cryptocurrencies like Bitcoin do not affect sentiment surrounding the value of coins. They do. For example, recent restrictions imposed by China contributed to a period of severe volatility in BTC prices. But cryptocurrencies are naturally freewheeling assets.

No international border or central agency governs them. This presents a problem for policymakers accustomed to dealing with clear-cut definitions for assets. He pointed out the need for legislation to specify which regulator should oversee crypto exchanges. Gensler mentioned that the SEC has "taken and will continue to take our authorities as far as they go. This means that popular cryptocurrency exchanges such as Coinbase and Binance might find themselves spending millions of additional dollars to ensure they are compliant.

Lack of regulation creates confusion on both an individual and an institutional level. The absence of clarity can cause significant price volatility and market crashes. Novice investors are likely to be scared by the price fluctuations and panic sell, causing crashes.

Most cryptocurrencies, including Bitcoin and Ether, are purely digital assets with no backing of any physical commodity or currency. In essence, this means their price is determined entirely by the laws of supply and demand. Without any other stabilizing factor, like government backing, many reasons may lead to a fluctuation in demand or supply. Anyone with access to the right equipment has the know-how can mine cryptocurrencies.

They are not backed by the standard tools used to assign value to money. Hence, investors can find it hard to trust in them. Unlike real estate or the stock market, this market is not seen as needing expertise. So many part-timers invest in it with the hope of making quick gains. But, sometimes, when that does not happen, they lose patience and withdraw from it. This frequent involvement and withdrawal also cause volatility.

The term FUD fear, uncertainty, and doubt is used across several topics, and the crypto community has adopted it to denounce what supporters see as the intentional spread of misinformation. Conversely, skeptics write off the term as a defense mechanism for investors to brush off negative news. Whether it is a case of FUD or a genuine piece of bad news, headlines that directly or even indirectly concern crypto can scare investors into panic selling on a scale that can trigger a period of significant volatility.

There is no shortage of headlines behind the wild fluctuations in Bitcoin prices. Stories such as the bankruptcies of crypto exchanges. Gox in and Yapian Youbit in shook investors.