Crypto
  • BTC
    21192.4 -1.07%
  • ETH
    1216.01 -1.51%
  • SOL
    39.98 -4.79%
  • ADA
    0.5 1.02%
  • AVAX
    20.21 -4.17%
  • DOT
    7.97 -1.39%
  • LTC
    57.78 -1.09%
  • BCH
    114.7 0.68%
  • DOGE
    0.07 7.28%
  • CRO
    0.13 -0.78%
  • MATIC
    0.58 -2.76%
  • LINK
    6.92 -3.98%
  • UNI
    5.63 0.86%
  • SHIB
    0 -1.78%

Crypto sell off: What just happened?

Vast majority of cryptocurrencies is in red numbers today. And we do not mean losses of few basis points or few percents. Most of the cryptocurrencies have lost more than 20% today , with even some of the bigger ones losing more than 30-40%. Why did this happen?

Huge sell off and huge retracement - for now

With Bitcoin, Ethereum, Cardano, Binance Coin and almost all other cryptocurrencies losing huge amounts and creating new lower lows, the main question is, what happened to the whole cryptocurrency market? This kind of movement, where all the cryptocurrencies would decrease so significantly so fast, was probably seen last year during the Covid-19 crisis, where all the markets tanked. Ever since then, most of the cryptocurrencies have bagged huge profits and the retracement, correction, sell off or even flash crash (call it what you want) of Covid-19 like volume and speed was unimaginable to happen any time soon.

However, markets are unpredictable, which proved to be true again today. With Bitcoin going below 30 000 dollars, Ethereum below 2 000 dollars or Binance Coin hitting 280 dollars, cryptocurrency market once again proved that it is one of the most volatile markets. All of TOP cryptocurrencies, and many more, have already erased was majority of losses, with huge wicks on the 4H and daily charts.

Combination of bad news

The probable reason for this sell off was a combination of all different kinds of bad news. These included Tesla turning their backs to Bitcoin as payment method for its products, Musk being very negative and articulate about his views on shortcomings of cryptocurrency sector and Bitcoin as such or newly imposed rules in China that are going to prohibit companies to offer any cryptocurrency-related products and services.

Moreover, the markets have not seen such a correction in past several months and have risen significantly in that period of time, which according to some, was only a bubble-like behaviour and hype or overly optimistic sentiment. Therefore, for bullrun to continue, this type of correction movement is necessary, in order to be able to give some space for retraction of all the overheated indicators as well as to calm the overall sentiment down.

Do not panic

Movements such as the one visible today are not something new in the cryptocurrency world. This sector is still extremely volatile with very small market capitalisation compared to other financial instruments and therefore can be easily "manipulated." However, it is important to keep in mind that during corrections such as this one, markets can be very volatile to both directions and that it is not the best strategy to be selling out of fear. Appropriate strategy, risk and money management are always necessary for all investors, since they have the ability to not only protect your financial wealth, but also emotional well-being.

Therefore, having appropriate stop losses or limit orders should always be in order and in cryptocurrency world, which is still considered very risky. It is also important to only invest money, that you are fine to lose, since cryptocurrencies are still new asset class that needs to establish itself in the markets properly (not a financial advise).

Marek is a cryptocurrency enthusiast with several years worth of experience in the industry. He has been working with numerous cryptocurrency and FinTech projects, where his main r...

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