The trending news right now is that the cryptocurrency market is down. New entrants are scared to invest in crypto for fear of becoming stuck in them or even having a loss in a worst-case scenario. As observed by many, the market is now facing numerous challenges that turn away investors. In fact, buyers, sellers and other investors have lost money in some cases. But what are the main causes of the problems people seem to be discussing in regard to the crypto market? Let us look at the common ones in detail.
Is Crypto Market Down?
Heavy Market Regulation
Investors are interested in making money through the common method of buying low and selling high to make a profit. This can be forced to occur using a tactic called “pump and dump” and is now heavily manipulated by powerful people when they have an interest. It costs most other investors who do not consider this to be a convenient time to sell.
Even though cryptocurrencies are decentralized, which means that there is no government that controls them, there are departments or agencies of various national governments that regulate markets around the world. The SEC is one of them and has been moving ahead until lately. Recently, their efforts have stalled as the market expands. Stalled regulations mean that markets can do what they want, but uncertainty remains about future regulations.
It Is More Difficult to Make Money
People invest in cryptocurrencies to make money. The miners dedicate their time and money to set up computers with mining software that assists and confirms transactions. In the future, they want to sell the coins they earned from mining and make money. According to trybe.one experts, those who invest in an ICO get in early to make more money than others. But making money from an ICO is now more challenging than it was initially. The markets have changed.
Hard to Diversify Risks
A business of any kind has numerous ways to diversify risk. But the crypto market functions differently from typical markets. The investors feel that the system is volatile and that the risks they take are too big. Currently, only major coins like Bitcoin have a cap on the maximum number available. Most others are left so that inflation due to saturation reduces investment and the increase in total number of coins. According to experts in the sector, people feel that there could be a better way to diversify risks like allowing conversion of one coin to another or to fiat money and the other way around. But this process is hard for people to achieve without going through tedious and risky steps.
Security Challenges Are Still Present
If you receive an offer for an upcoming ICO, you may think that it is a fraud. Yes, you have all the reasons to be concerned. Many people have been scammed through Ponzi schemes directed at them. Hackers are also another threat that is real and a danger at the moment. It is possible to lose your wallet full of coins if you do not protect your computer since the hackers are always looking for the opportunity to attack. Because of all these reasons, most investors feel that the market is still down unless something positive changes its direction.