There are many factors that can influence the ups and downs in cryptocurrencies, some are technical, and belong to the science of economics, however, the most important of these is the human factor, the human being that fosters social phenomena able to affect one thing or another in a positive or negative way.
Markets do nothing more than react to the accumulation of influential human decisions simultaneously and in real time. We will take several examples to understand this phenomenon.
When a well-known company or organization is associated with a cryptocurrency, this news usually causes some kind of impact on the markets, in this case it is usually a positive impact, but when it is a rupture, it causes the opposite effect, a low In the value of cryptocurrencies, since it is a matter of trust, trust is given and trust is removed, and when cryptocurrencies are backed by recognized companies this becomes a source of trust for the investor.
Now, if the association or break-up of a company with a cryptocurrency can cause such a stupor in the market, imagine for a moment what could happen with the position that a government or political regime adopts for or against a cryptocurrency project decentralized
These facts (positive or negative), they should not necessarily determine the fate or future of an asset, but it is something that happens, this news ignites the alarms of cryptocurrency investors and operators, why? Simply because this is the game of investments, that which is behind the markets and economies of the world.
Parallel to this, the social media are there to massively disseminate any type of information, whether this is positive or negative news, and of course, the media through the dissemination of the news end up playing an important role so that Cryptocurrency markets rise or fall in value, that's when we begin to see the percentages in green or red, happy faces or sad faces.
Now there is something we call the domino effect, both positive and negative, when the percentages are green, trust in the asset is strengthened, and trust expands throughout the world, but when the opposite occurs and numbers they are in red, a kind of panic is created in the markets, and therefore the inhabitants count start to sell their assets, a fact that only aggravates the situation, which could be handled in a normal way and not necessarily have such an impact negative. And less, in a cryptocurrency like Bitcoin, which in the long term, always has an upward trend. This also reveals that there is a worldwide misinformation regarding cryptocurrencies and their behavior, something in which the community must work to strengthen the market.
"If Apple's shares fall people continue to buy their products and services regardless of financial speculation that is the approach that the global crypto-community needs."
David Battaglia Youtuber and Cryptocurrency Trader.
It is important to keep in mind that the Bitcoin after reaching its historical maximum at the end of 2017 when it came to be valued at 20,000 USD, at the beginning of 2018 it began to fall in a downward spiral:
• In early 2018, Bitcoin began to experience a sharp drop in value, and with east all the crypto-market was falling apart, the main cause? The political decisions of the governments of South Korea and China almost simultaneously affected the South Korean market, which in turn was one of the most important in the world after the first Chinese regulations, this ended up turning on the alarms in Everyone, once the numbers were red there was nothing to do to prevent people from panicking.
• Bitcoin, during the year 2019, was recovering until it reached a maximum of USD 13,000 during the first quarter of the year, but after the second quarter it began to fall again until it reached its lowest point of USD 6,500 at the end of November, According to most of the media, the causes were again given by the new decision of the Chinese government to regulate the Exchange, another version is the possible manipulation of large investors, popularly known as whales, which push the market down, to Then reinvest your money and get important profit margins upwards again.
Is it bad that a market has fluctuations?
First of all we must understand that market fluctuations is a completely normal economic and social phenomenon, there is practically no financial asset in the world that does not suffer this financial phenomenon in some way, this because the markets in all areas are constantly moving , nothing is static, everything is dynamic, for example:
• The location or not of a new Gold, Silver or Diamond mine may affect the value of these markets.
• The political decisions of the United States government regarding international trade with China and Europe may affect the value of the Dollar.
• The emergence of new forms of renewable and sustainable energy negatively affects oil prices.
As we can see the market fluctuations is a normal behavior in all financial assets, what is true is that in the cryptocurrency sector this fluctuation is more volatile than normal, something that in turn is understandable, for a market that just started in 2009 with the creation of Bitcoin by Satoshi Nakamoto. Even for such a new market, many experts say that cryptocurrencies have performed well, and that the fluctuations are good because they determine that a market is alive. Says Arthur Hayes, (CEO of BitMEX) about it:
"There is nothing healthier than the volatility of the BTC."
What to do when the cryptocurrency market falls?
• Educate yourself to be Strategic and Non-Emotional: The fact that people fall into chaos and start selling their crypto-assets show that there is still no good investment education in the global crypto-community, people cannot get carried away by emotions, they must adopt a more strategic stance, the fact that a government takes a bad step against an active crypto should not think that this is wrong, in fact, it is something positive because it is an indication that cryptocurrencies represent the road of decentralized finance for humanity today.
• Diversify your Capital: As it is such an innovative sector of finance, it is important to understand that it is still laying its foundations and continues its expansion process in all countries of the world, which means that these fluctuations downwards and upwards will continue to arise, the solution is strategic thinking, when and how to give financial movements high and low. Diversification of capital is a good strategy, so that if cryptocurrencies fall you don't have to have that money, rather choose to spend on other types of assets that spend it better, be they Gold, Silver. Certain Fiat currencies, among others.
• Use Stablecoins: Invest part of your capital in Stablecoins cryptocurrencies, these are there to help you keep part of your capital at a constant value. Remember that there are different types of stablecoins, some are anchored to fiats, others to natural resources and even other cryptocurrencies. Stablecoin are always like cards under the sleeve that will help you get out of trouble in the face of fluctuations.
Where can I save my Stablecoins and exchange them for other cryptocurrencies or fiat money?
I will make the following recommendations:
- CoinCola: A place of exchange whose main virtue is to provide an integral environment, here you can exchange cryptocurrency pairs in your Exchange at one of the lowest costs in the market; 0.1% per transaction. Also, this platform has an OTC (Over-The-Counter) free market exchange place, which you can automatically access and transfer your cryptocurrencies to the OTC, for free, but this does not end here, since in the OTC of CoinCola you can also exchange your most popular gift cards for Bitcoin, Ethereum and even Tether, among many other cryptocurrencies. CoinCola has many other benefits, if you are interested enter here: www.coincola.com
- Binance: It is a professional cryptocurrency exchange place, where you can opt for a wide range of cryptocurrencies that you will not find in other places (popular and non-popular), with which you can exchange for your stablecoins. One of the advantages of Binance is that having so many users, its withdrawal fees from one wallet to another external one are quite low, if you want to know a little more about Binance, click on the following link: www.binance.com
- Direct provider wallets: remember that each cryptocurrency platform, even the stablecoin, has its own wallet service, and you will be largely responsible for the security of each wallet you decide to have, since your Cryptocurrencies will be stored on your computer.
Conclusion:
Obviously when a government, or other public or private entity attacks against cryptocurrencies, this should not affect the market, because it is assumed that all those who make decentralized financial life precisely do so in search of financial freedom and independence, that is , that little should matter what governments think, rather this should strengthen the crypto-community.
This fact shows that there is a long way to go and work to strengthen the crypto-market, and the key to everything is in the education of behavior that all users of cryptocurrencies should have to face the threats of governments and some companies private.
Education in the crypto-community will be the great challenge that all the factors involved in the crypto-market will have to face and work: developers, miners, exchange houses and savings users so that the reach longawaited stability and growth in the Crypto assets in the future.
Marcelo Durán
Specialist in Social Communication.
LinkedIn: https://www.linkedin.com/in/marcelo-dur%C3%A1n-7a193860/