Why Crypto Market Crashed?

The cryptocurrency market is a roller-coaster ride, and for many investors, it feels like an emotional journey of highs and lows. Bitcoin’s drop from $100,000 to around $96,000 to the uncertainties fueled by media hype, the market leaves investors afraid yet hopeful. In this blog, we’ll learn about the directions of the cryptocurrency market, explore the reasons behind the fluctuations, and discuss strategies to navigate the market effectively.

What’s Happening in the Cryptocurrency Market?

The cryptocurrency market is often subject to fluctuations, and understanding the reasons behind these swings is crucial. While many might panic during a downturn, a closer look at the market reveals that there’s often little cause for alarm.

Let’s explore some key factors currently influencing the market:

Media-Driven Panic

A remarkable factor affecting the market is the media’s sketch of events. For instance, reports of a new virus outbreak or uncertainties in global economies can create a great effect. Recently, cases of a new virus surfaced in India, and global markets reacted nervously. However, medical experts quickly clarified that the situation was not as severe as COVID-19, leading to market recovery. Such exaggerated coverage often leads to unnecessary panic among investors.

Political Events and Speculations

In the U.S., political developments like Donald Trump’s potential court case and his stance on cryptocurrency have been hot topics. Speculations about policies and legal outcomes create temporary market jitters. While some fear instability, the market often stabilizes once clarity emerges.

Institutional Players’ Influence

Large institutional investors like BlackRock and Fidelity play a significant role in shaping the cryptocurrency market. Recently, reports surfaced of major buying and selling activity by these players, which created temporary pressure on Bitcoin prices. For example, while Bitcoin ETFs sold significant amounts, BlackRock quietly purchased nearly 6,000 Bitcoins in a single day, showcasing their strategic approach to the market.

Cryptocurrency – Support, Resistance, and Market Strategy

Navigating the crypto market requires a strategic approach. Understanding support and resistance levels, along with maintaining a disciplined mindset, is essential for both short-term and long-term investors.

Key Support and Resistance Levels

Bitcoin Support Levels: Around $96,000 to $97,000 (50-day moving average) and a crucial support range of $83,000 to $85,000.
Bitcoin Resistance Levels: Short-term resistance stands at $102,000, while long-term resistance could extend to $110,000 or even $125,000.
For Ethereum, key support levels include $3,000, with resistance projected at $4,800 to $5,000.

Short-Term vs. Long-Term Strategies

Short-Term: Trade using technical indicators and predefined support and resistance levels. Avoid emotional decisions during market dips or surges.
Long-Term: Focus on portfolio diversification and hold onto high-potential coins. Keep a clear target for booking profits and securing your principal investment.

Understanding Market Manipulation and Liquidity Trends

Cryptocurrency markets often experience manipulation, especially by institutional players. Observing liquidity trends can provide insights into market movements:
i) Data from platforms like Crypto shows that Bitcoin’s sell liquidity is rapidly decreasing. This indicates that even at high prices, investors are unwilling to sell, signaling bullish market sentiment.
ii) Accumulation by Large Players: Addresses holding Bitcoin have increased, suggesting strong accumulation by institutional and retail investors.

Crypto Coins to Watch

Market dips often present excellent opportunities for investors to accumulate promising coins. Here are a few coins worth considering:

Ethereum (ETH)

Entry Points: $3,000 and $2,800 zones.
Potential: Expected to perform well in 2025, driven by adoption and institutional interest.

Near Protocol (NEAR)

Current Price: Around $2.5.
Short-Term Target: $7-$8.
Potential: High potential for growth due to innovative use cases and adoption.

Aptos (APT)

Entry Points: $8.5 to $9.
Potential: Targets range from $11 to $15 in the short-to-mid term.

Chainlink (LINK)

Current Price: Around $6.2.
Potential: Short-term targets of $8 to $10, driven by increasing demand for decentralized oracles.

Shiba Inu (SHIB)

Entry Points: $0.000018 to $0.000020.
Potential: 50% growth potential, especially during meme coin rallies.

Fetch.ai (FET)

Entry Point: Around $1.3.
Potential: AI-driven projects like Fetch.ai are expected to see significant adoption, with targets up to $2 in the short term.

Lessons from Cryptocurrency Market History

i) Bitcoin’s Historical Trends: Bitcoin’s price often surges after key resistance levels are broken. With institutional interest at an all-time high, predictions of $150,000 to $200,000 by late 2025 are plausible.
ii) Market Cycles: Bearish phases often precede bullish rallies, providing excellent entry opportunities for disciplined investors.

Adopt a Balanced Approach

While the crypto market can be lucrative, it is essential to adopt a balanced approach:
i) Diversify Your Portfolio: Invest across multiple assets to reduce risks.
ii) Avoid Overleveraging: Do not invest more than you can afford to lose.
iii) Focus on Fundamentals: Research the utility and potential of the coins you invest in.
iv) Stay Updated: Follow reliable sources for market updates and insights.

Conclusion: Stay Patient, Stay Strategic

The cryptocurrency market is not for the faint-hearted. While short-term fluctuations can be nerve-wracking, the long-term potential remains promising, particularly for coins with strong fundamentals and institutional backing.

If you’re new to the market, take small, calculated steps. Remember, the key to success is not to panic during downturns but to recognize opportunities in them.

Note: All Coins Prices are estimated in dollars ($). Current Dollar ($) conversion in INR (₹) is 1$ = ₹85.88.

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