The crypto market crash is a hot topic and trending all over the web. Since the market crash of April, lots of users have assumed different things about the crypto industry’s future. Although this is not the first time we are experiencing a bear market, it is the first crypto bear market with the industry in the global spotlight.
Cryptocurrencies have lost over 60% of their overall value. Some of the popular cryptos, such as Bitcoin and Ethereum, are 70% below their previous ATHs. The crypto market crash has led to many users losing their investments. For example, the Terra crash of May was a huge blow to the industry and triggered the interest of some regulators around the world.
The US Securities and Exchange Commission is on the verge of imposing regulations on crypto operations in the country. Many users are concerned that the crypto market crash could lead to a bigger economic crisis. Here are some questions many investors are asking themselves about the crypto market.
What Would a Crypto Crash Mean for the US Economy?
Although the crypto industry is still in its infancy in terms of adoption, it is mainstream enough to get ads at the Super Bowl. Many US companies are slowly incorporating crypto into their operations. But with the instability in the market, there are concerns of a repeat of the 2007 housing market crisis that sent shockwaves throughout the US economy.
Most experts doubt that a crypto crash would affect the US economy. The Crypto market is half its worth in November 2021, and trading activities are down by a huge percentage. However, there is little reason to believe that all of this will result in a national economic crisis.
According to Joshua Gans, an economist at the University of Toronto, the majority of banks and other financial institutions have limited exposure to fluctuations in cryptocurrency prices. This is because they have only recently started to dabble in it by opening new offices dedicated solely to it. And, in some rare instances, accepting digital tokens as collateral for loans.
Joshua said, “Cryptocurrency is not quite there as a collateralized thing. Could one of these banks have done something extremely stupid? Sure, but it doesn’t look likely. They all have their crypto divisions, but betting the bank on it? I really don’t think they have. Even if a bank has taken on too much crypto risk, one idiotic bank we can handle. “
The US housing market still occupies a bigger room than the crypto industry. So, it’s unlikely that a crypto crash would cause an economic meltdown. However, it would affect the psychology of investors and make them less trustful of developing industries.
Why is the Crypto Crash Nowadays Different?
The recent bear market has led to speculation and theories about the industry. Many people believe we have come to the “end of crypto.” But that’s not really the case. This wouldn’t be the first time Bitcoin has lost its value. Old timers would recall similar experiences in 2014 and 2018. But, we agree that this time is a lot different from the past bear market.
This time around, the Russia-Ukraine war has sparked fears of a third world war. And we are all recovering from the hardships of the pandemic. Also, after a 30-year absence, high inflation is back on the scene with tighter monetary policies. All these have led to a reduction in the prices of cryptocurrencies.
Some notable stablecoins, like Terra’s UST, lost their peg. Many projects suffered huge losses due to their exposure to 3AC. There is a reduction in people’s trust in the industry. So, we can say that stricter policies in addition to macroeconomic conditions make things different. The leverage in the system is also quite different from what it was in 2017. But, experts believe the market might turn around. However, no one knows when this will happen. Including us.
Why is the Crypto Crash Great News for Gamers?
Investors and traders are currently having a hard time staying in the crypto market. The same cannot be said for cryptocurrency gamers. Blockchain gamers are currently having a good run and appear to be doing better than other areas of the market.
Gamers around the world have been waiting almost two years for a cryptocurrency meltdown to happen so they can acquire a GPU at a better price. Crypto mining was a major driver for GPU scarcity. But these days, most miners make less than a dollar a day and see no need to continue their trade. Some GPUs are now available for less than a third of their former price.
So, the more the market crashes, the more gamers would have a greater chance of purchasing GPUs at lower prices and building better games.
In conclusion, it is highly impossible to predict when the market will get back on track. But, it is best to stay on the safe side and invest carefully to avoid losing your assets or falling victim to a scam project.
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