02-12-2022, 10:04 PM
The Reason why the Crypto Market tanks along with other markets.
<!-- SC_OFF --><div class="md"><p>Since the crypto markets are considered a hedge against other markets, people are confused when they go down at the same time as everything else. Like in March of 2020, when everyone got more personal space than they knew what to do with.</p> <p><strong>Downturns or crash in the market causes something called a Liquidity crisis</strong></p> <p>This means that if one asset crashes, the rest of them do too , due to the fact many people, borrow so much money to invest on margin.</p> <p>When the market tanks, they get a margin call, and have to pay back their debt faster or go bankrupt. They then sell whatever assets they hold in another market to pay back their debt, making the value of those assets go down, which makes other people invested in those assets get margin calls and have to do the same thing. So a ripple effect happens between them</p> <p>So when one market tanks often many other markets follow. Crypto markets are a hedge against the regular markets because of it's the technological advances in different use cases but the same humans invest in both.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Wabi-Sabibitch"> /u/Wabi-Sabibitch </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/sql4ct/the_reason_why_the_crypto_market_tanks_along_with/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/sql4ct/the_reason_why_the_crypto_market_tanks_along_with/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>Since the crypto markets are considered a hedge against other markets, people are confused when they go down at the same time as everything else. Like in March of 2020, when everyone got more personal space than they knew what to do with.</p> <p><strong>Downturns or crash in the market causes something called a Liquidity crisis</strong></p> <p>This means that if one asset crashes, the rest of them do too , due to the fact many people, borrow so much money to invest on margin.</p> <p>When the market tanks, they get a margin call, and have to pay back their debt faster or go bankrupt. They then sell whatever assets they hold in another market to pay back their debt, making the value of those assets go down, which makes other people invested in those assets get margin calls and have to do the same thing. So a ripple effect happens between them</p> <p>So when one market tanks often many other markets follow. Crypto markets are a hedge against the regular markets because of it's the technological advances in different use cases but the same humans invest in both.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Wabi-Sabibitch"> /u/Wabi-Sabibitch </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/sql4ct/the_reason_why_the_crypto_market_tanks_along_with/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/sql4ct/the_reason_why_the_crypto_market_tanks_along_with/">[comments]</a></span>Kind Regards R