Cryptocurrency is an interesting investment model. The concept became popular through Bitcoin in 2009. Bitcoin is the first crypto token enabling peer-to-peer transactions using platforms like the Bitcoin Circuit app. The developers were looking at creating a digital asset enabling easy fund transfer. The token is linked to the fiat currency from the country that one operates. Unlike traditional assets, cryptos do not have restrictions on their liquidity. to put it in simple terms a user can transfer tokens easily from India to the US. The recipient in the country can convert these tokens into fiat currency. Now, what is the advantage of such transactions? Bitcoin or crypto tokens do not make use of any third-party agencies to complete transactions. There is no involvement of regulatory agencies or banks. Hence, the funds do not transfer through your bank accounts. Instead, a crypto exchange works to enable these transactions. Crypto users own a digital wallet and these wallets work as storage space to hold your tokens.
Bitcoin’s working model including the decentralized finance and blockchain philosophy attracted many. The blockchain platform gained immense attention and approvals. Other than cryptos, blockchain technology is now widely used. Many companies are investing in the research and development of blockchain technology. Also, the platform allows for easier and more efficient transactions that are cost-effective. Also, the time taken to undertake these transactions are much less.
Not only cryptos, but all other investment models are also suffering. Markets are crashing with the price of crypto tokens going down. During the initial days, the market condition was predicted to be only a bear market. But the continued inflation and other external conditions have impacted cryptos as well. Beginning May onward, the market performance is depressing. All popular tokens including Bitcoin, Ethereum, and Shiba continue on the red line. Terra has completely washed out from the market. The market capitalization of crypto tokens has fallen to $1.5 trillion.
Now, there are two ways of looking at the current market conditions. Pessimist investors are on the lookout to sell their holdings. Despite suffering losses, certain investors are releasing their holdings.
Now, there is another group of optimistic investors. These investors are still hopeful for the market recovery. Bitcoin suffered a major crash in 2017. It took another 18 months for the markets to recover. But after recovery, the price of Bitcoin went to an all-time high at $65k. Investors expect that history will continue to repeat itself. The market will revive and tokens will see an increase in prices.
The ongoing market condition is no different. A survey published by Glassnode indicates that 100 digital wallets are holding BTC. The holdings increase by 10k in each of these wallets. An interesting factor is that these wallets are geographically dispersed.
Many Bitcoin miners and mining companies have been releasing a large volume of holdings. This is because these investors have been facing ongoing losses. Once the tokens are disbursed, then these investors reach their break-even point. It allows for meeting their losses and covering their infrastructure costs here.
But what happens to the tokens released to the open market? This is where the second group of investors take lead. These digital wallets may be individual resources or crypto whales. These crypto whales engage in active buying. This is why there is a significant rise in crypto holdings. The number of tokens has increased from 10 to 10k in a week.
Crypto whales have the potential to impact prices in the large-scale market. These investors accumulate tokens in their accounts and sell them off. In certain cases, crypto whales sell their tokens at a slow and steady pace. Alternatively, there are crypto whales who release their entire holdings into the market. In such cases, the prices of tokens face a sharp fall. It is because of the inflation effect on these tokens. The tokens are available in large quantities and the total number of users is minimal.
The current crypto market is evolving. As an investor, you need to wait to understand the market condition before new funding.
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