Crypto is highly volatile, making it both appealing and risky. Historical crashes are common in this market. Recently, Bitcoin fell to $49,000, affecting the entire crypto market. Key reasons include:
1. **Global Issues**: Global security and recession concerns are major factors. Military tensions in the Middle East and increased US military presence have created investor fear, impacting stocks and high-risk assets like crypto. The US stock market lost $2 trillion, and Japan’s market dropped 25% in a week. These issues have also hurt crypto. Additionally, recession fears, especially in economies struggling post-COVID-19 and the Ukraine-Russia war, have worsened the situation.
2. **US Elections**: Uncertainty over US election outcomes is affecting the market. Donald Trump’s crypto-friendly stance is overshadowed by allegations, including claims of illegal funding from Egyptian General Sisi. This has negatively impacted the market. With Joe Biden’s withdrawal, Kamala Harris’s increased chances (by 16%) add uncertainty, as she has shown no positive stance on crypto.
3. **FED Interest Rates**: High interest rates strengthen the dollar but weaken stocks and crypto. Uncertainty remains about whether the Fed will cut rates or increase them due to high inflation and unemployment, causing investor anxiety.
**Strategy**: Drops can be a buying opportunity. Those with assets in USDT can buy at lower prices to reduce average buying costs. DCA (dollar-cost averaging) during dips is beneficial. For those holding spot assets, it’s best not to sell at a loss but to stay patient. Avoid obsessing over your portfolio to prevent desperation and poor decisions. Focus on finding opportunities and reviewing your portfolio instead.