#MarketTurbulence In the exciting yet unpredictable world of cryptocurrencies, "Market Turbulence" is a term you will often hear. For beginners, it is key to understand that it refers to the rapid and unpredictable price movements that cause the value of cryptocurrencies to rise and fall dramatically in short periods.
What causes this turbulence?
Market Sentiment: Cryptos are very sensitive to news, rumors, and the general mood of investors (fear, euphoria, FOMO - Fear Of Missing Out). A tweet from an influential figure, a regulatory change, or a hack can cause panic or euphoria.
Inherent Volatility: Unlike more mature markets like stocks, the crypto market is relatively young and has less trading volume, meaning that large buy or sell orders can have a disproportionate impact on the price.
Macroeconomic Events: Global economic factors such as inflation, interest rates, or geopolitical conflicts can influence investors' risk appetite, affecting cryptocurrencies.
Technological Updates and Security: Innovations in blockchain protocols or, conversely, security vulnerabilities and hacks can also generate sharp movements.