Why do cryptocurrencies in the stock market crash in 2022?

1. Reversions appear to be prevalent in history.

To begin with, the crypto market’s history implies that it is in peril. Even though large upswings have happened often during the last decade, reversions are typical. The entire value of all digital currencies has increased more than 14-fold to $2.14 trillion from the low in March 2020. This is akin to the 35-fold gain in overall market value between March 2017 and January 2018, which occurred during 10 months.

2. The enthusiasm around blockchain technology has outpaced its use.

People seem to be enthusiastic about blockchain technology’s future possibilities. DeFi allows for virtually immediate cross-border payments at cheap costs, and it may democratize the process so that even inhabitants of emerging markets can participate. Smart contract-based blockchains have the potential to transform supply networks. Businesses are reluctant to leap at the possibility to finance large-scale projects.

3. Inability to separate oneself from the stock market

The difficulty of cryptocurrencies to separate from the stock market is another reason they may fall in 2022. Digital currencies are considered autonomous assets and a hedge against the larger market in many respects. Bitcoin (CRYPTO: BTC), for example, gives the impression of a restricted token supply, which is capped at 21 million. With the money supply in the United States increasing, investors see Bitcoin as a safe-haven investment.

4. Margin debt is a disaster

A fourth reason why cryptocurrencies in the stock market may fall in value in the coming year may be found in margin debt. The amount of money borrowed with interest by investors to buy or short-sell stocks is referred to as margin. Investors that use margin to leverage their transactions can boost their profits in some cases.

5. Meme coins lose their mystical properties.

Finally, don’t be shocked if the popular “fear of missing out” (FOMO) movements suffocate the bitcoin industry in 2022. Almost any coin named after the Japanese Shiba Inu dog breed has been a hit this year. Through Dec. 13, the aforementioned Shiba Inu has increased by more than 45,000,000 percent, while Dogecoin and Floki Inu have increased by 3,119 percent and 2,763 percent, respectively.

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