Crypto Academy Contest S1W4 | Reviewing the Instability of the Crypto Market by @estyroberts

^{Designed with canva}

Greetings everyone, and welcome to another week of the steemit crypto academy challenge where we are asked to talk about the instability of the crypto market.

What i think of the drop

Crypto market as we know it works with demand and supply and this makes it volatile, leading to either a positive or negative outcome depending on the traders position.
Most people in crypto sometimes do not trade but hold coins long term to make profit but as we all can see from this drop even this position can be greatly affected.

This drop is really not a new thing to traders and holders who are old in the market because different things can affect the psychology of a trader which might lead to massive selling that would end up causing the price to drop vice versa.

From my point of view, I can say that there are many factors affecting the performance of the crypto market, keeping it in an extended Bearish run for the past months,
While there are no clear reasons, there are plenty of things to consider why the crypto market is having a poor run using Bitcoin as a case study.
When BTC hit its all-time high in November 2021 it gave room for the possibilities of a market correction, talking from the technical analysis standpoint the market moves in waves, so after every impulsive movement there should be a corresponding retracement, so the drop of BTC shouldn't come as a surprise only if you have the knowledge on how to analyze the market chart.

^{BTC Chart showing the ATH @69000. taking from the trading view application}

Possible causes of the drop

PROFIT TAKING BY THE BIG WHALES

As stated earlier that BTC hits its all-time high in November 2021. so it's time for the big players also called the Big whales in Trading to start taking their profit, so as the whale pull out their profit in large sum this cause a trend reversal from a Bullish upward movement to a Bearish downward movement.

The buying pressure started dropping, changing traders' sentiment from a buy to a sell, this caused an uproar in the market and everyone started selling off their assets

I think the drop is affecting the success of the crypto market, people are pulling out by selling off their as asset, because of scares of losing everything, many people are slowly losing faith in the market which is bad for any project.

How long it will continue this downtrend

Traders psychology and sentiments played a role in this drop, to get and idea as to how long the downtrend would continue we would look up to BTC as it is the grand master of the market

From the technical viewpoint the drop of BTC has been foreseen by the use of technical analysis, After a massive bullish run, it is expected that at some level of resistance that the market will exhaust its buying power and that will be the start of a healthy pullback/retracement. So the market is currently in a retracement phase.

Trading volume refers to the entire number of cryptocurrencies traded or exchanged between the buyers and the sellers in a particular timeframe. For example if by then end of a trading hour a 1000 Bitcoin is exchanged we can say that is the trading volume.

Volume in the market is talking about how many traders are still participating in trades in the market.

So in as much as the Crypto market is having a poor run, there are traders shorting this market so the volume is not affected.

The Terra ecosystem's massive drop was caused by the devaluation of the UST. For the terra ecosystem to be successful there had to be adoption of UST as a stable coin So when UST lost its peg and dropped from $1 to $ 0.68. the Terra Ecosystem dropped accordingly with its Luna Currency.

Do you think the price will bounce back?

No, I don’t think that Luna will bounce back in the closest future because most traders and investors already have doubts, seeing that the amount of Luna in circulation is really high and the only way to balance and reduce it is to burn some, this feat cannot be easy to achieve because most of these coins are not in the possession of the foundation guard.

Since the market is unstable for now the best way to deal with it is to follow the trend while trading. but if you don't have knowledge of trade I will advise you to sell off your coins.

Just like every other cryptocurrency, the steem ecosystem was not excluded from the current downtrend and both the native coin (~Steem) and stable coin (~SBD) was affected.

The downtrend of the market made the steem price and SBD to drop to a -35% value resulting to a debt ratio of above 27%. Normally the debt ratio is maintained at 9% but the market instability and downtrend caused it to rise above 10%, this halted the production of SBD and until it goes back to 9% for its printing to continue.

This debt ratio affected payout as there was no more payment in SBD and I can say it affected me slightly because I got less than my initial reward.

Regardless of this I am still very confident in the steem project seeing that there has been some improvements and that the SBD printing rate has increased and payouts now include some SBD. The current SBD printing rate is at 3300

^{You can check the rate here}

Conclusion

All crypto traders are risk takers, I advise that traders and holders should always take note of the demand and supply of the market as the crypto space is volatile in nature. But even in this downtrend I am sure it would still go back up again.