In this article, I will tell you about why crypto currency is crashing, in this I will tell you its reasons, in this I will also tell you whether you should invest in it or not and then when should you do it?
Why crypto market is crashing?
All know that if we talk about markets. If you are talking about crypto market, share market you can talk about any market whether it is a real estate market where people have invested money. People are in uncertainty and that uncertainty is of what let’s understand that in India more then one lakh of cases are coming of covid-19 ao now people are doubting that is this start of the third wave. So right now people are assuming risk of third wave, that if a third wave comes then what. Again lockdown occurs than. So this then what is a very big thing, people are in doubt nothing is clear about what is going to happen. Now whenever people are in this kind of a situation then not just in crypto market but also in share market is rising or it’s falling it is crashing, so why this is happening sometimes it is rallying sometime it is crashing because buyers and sellers are in uncertain position and in the coming time. Here people are predicting that in the coming time a complete lockdown can happen and we have to save our money so here it is a psychological disturbance in people.
Recently it was trending it was trending very much about crypto bill maybe crypto will be banned they would bring regulations nothing is clear so when things are unclear people take their investment out of it. Many people are there in cryptocurrency who do not panic those who are in the category of holders but many people those who are in those who when unclear they think it is better to take their money out because till now the law has not passed in India so buying, selling or holding cryptocurrency as of now is legal but what will happen in the coming time this would be told by the time but again people are under the state of psychological disturbance that is why people are selling whenever there is selling then price falls and that is why we have we are seeing low prices in the cryptocurrency.
The point is rotation now what is the concept of rotation in any market you see that after a very hung bull run or bear run you will see exchange of money from one hand to another so right now retailers, people like you and me those who have put money in cryptocurrency market. I want to tell you that whether it be crypto market or stock market much money is not invested by retailers, money is invested by institutions, so in crypto market also if we talk about institutions then institutions have invested 70% in crypto market. So if institutions have involved 70% of the money then what are you going to see that these people are dominating the market.
So if institutions start to sell and if anything is being sold then some other person is buying, so retailers right now are seeing this as a buying opportunity that is why they are buying it institutions are selling so when institutions sell it whether it be stocks or crypto you will see the price going downwards. So here we have seen that what is the concept of rotation, that money is being transferred from one account to another so the money of retailers is being transferred to institutions.
This goes regularly but this is not very good so what is good is that when is there buying opportunity you should buy in dip,in low much dip you should buy that we will tell you here I will take a very basic concept a very short what happens is you see that whatever asset or stock price I saw at high now for sometime it increased and then it crashed, so here I should buy it as it is a dip, buying in dip is good but sometimes it’s not adviced . In both situations, let me tell you.
You can buy in dip it might be possible that bounces back up again but this can happen how would you get this clarity you get the clarity through trend is your friend whenever trend is being continued if downtrend is continued and there is no sign of reversal then we don’t have to buy and if the price is going upwards continuously and you see that trend is upward then it isn’t required that it has reached a point then you have to sell it, we will sell it but when we see a sign of trend reversal if there is no trend reversal then don’t sell it similarly if the market is crashing then let’s say it has breached it’s first support if it breaches its second support also and third support also then it could fall at any point any stock or any cryptocurrency, till the people are selling it but when to buy it, when you see trend reversal.
Next you have to understand about panic selling is happening, this panic selling is the reason because of falling of prices whether it be of ethereum or shibanu or bitcoin you talk about any crypto. So when panic selling happens then price falls. What happened, people had hold crypto for a long time so in cold storage their coins were being held now what people are doing that they have taken it out from cold storage and now they are selling it, why because here in market, there is a liquidity crisis.