THE CRYPTO CRASH
“….Without an idea of how you should approach crypto investments, you can blindly invest your money in cryptocurrencies and end up losing your investment…”
Above is a statement made by Mr. Irungu during our conversation in which we promised to bring you more from this enriching conversation. Now from our last week’s blog, we know that you know a few things about cryptocurrency. Crypto volatility however, can not be ignored simply because there are plenty of factors affecting crypto’s overall volatility. Let’s continue with the conversation to learn more about this and the cryptocurrency crashes that have been recently experienced.
“…The money markets have been in the receiving end of the harsh inflations in the economy globally making the dollar today be of little value than yesterday and the years before. This inflation has caused a wave that has not only hit the money market in terms of central banks in the world but have as well made it to the digital market where many digital currencies have been affected leading to the collapse of some. In the recent days there has been cases of companies that facilitate these currencies exchange filing for bankruptcy. A good example is FTX which was founded in 2019. Despite it being valued at an approximate of $34 billion earlier this year it has experienced a downward fall that has seen many of its investors trying to withdraw in an attempt to avoid loss. This has seen the company gallop at a high rate and even for today some investors are yet to get their funds back. This fail in the market has been caused by large amount of debts associated to the company from loans acquired by them.
Bitcoin has also seen a large fall in value making to the highest of its losses this October. This was the ripple effect of the collapse of FTX and the acquirement deal by Binance brow off. Before then Bitcoin and all the other currencies were holding on well and the gains were impressive. Despite the debacle in this market most currencies have started gaining ground once again and they are expected to have their glory again. Experts on Bitcoin say that they expect it to hit a high of $100,000 at some point showing that despite the tumble this markets are still sustainable and they will recover with time.
FTX’s fallout and bankruptcy can be seen as a failure on what they had invested in, that is the cryptocurrencies but as we know this might be one of the many factors that lead to the fall of that company. As we look at this crash in the market we need to know that the crypto business unlike the other money markets are decentralized to remove the intermediaries and therefore not controlled by a singular body like the central bank. This has seen many entities facilitating this exchanges and therefore the failure of one cannot be attributed to the failure of the whole system, but this doesn’t mean that we turn a blind eye on the fact that this markets are virtually controlled and therefore a naïve investor may end up blowing everything in a fantasy chase. As investors we should always consider this red flags in every investment that we make and look into the rewards before the investment. As I said before cryptocurrency is one of the upcoming trends and cannot be ignored and therefore investors need to look into it with the knowledge that as any other investments, failure might be inevitable.”
Much gratitude to Mr. Irungu a crypto expert and Reikims team for this substantial conversation.
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