It is evident that the digital financial market has been going through one of its worst crises since its creation; consequently, the market capitalization and the users that currently Bitcoin Before Investing have increased significantly.
The most alarming percentages regarding the fall of the CRYPTO MARKETare taken by Terra with almost 99% of its value, causing a domino effect on Doge that reached 90% of its value decrease. Since the beginning of the year, the leaders of Bitcoin and Ethereum have both been affected by between 50 and 60% of their initial value.
The effects that the downward trend has caused in the various digital currencies have undoubtedly generated different impacts on investors. Still, the common factor is the panic of losing them.
What is the reason for the fall of cryptocurrencies?
The complicated situation of the financial markets where digital assets have been significantly affected, and traditional investments such as technology shares have also decreased in value.
Many often wonder why this effect has happened because factors external to the digital market drastically impact it?
The answer could be simple, the positioning and adoption of digital assets are increasing, making their exchange susceptible to changes in the traditional economy since more investors from both markets are betting on these new financial digital instruments.
Among some of the direct causes that have affected and contributed to the decrease in the value of digital currencies are the following:
The constant intention of regulating cryptocurrencies, to the point of wanting to include them in the traditional financial system, where the various countries intend to interact equally in both markets.
This measure has affected the various Exchanges that exist, leading the market for currencies and digital assets, as is the case with Coinbase, which has caused the loss of more than 400 million dollars, creating panic even when thinking that they could fall in bankrupt.
On the other hand, we find the drastic drop Terra presented after dragging its stablecoin, decreasing its value by almost 60% and its Luna token with practically 99% of its total value.
Although all these behaviors have been susceptible as far as the digital environment is concerned, the assets of the technology companies listed on the stock exchange are not so distant from this cryptographic reality; they have also seen significant losses.
These facts have significantly impacted the confidence and security of users in terms of cryptocurrencies, which has undoubtedly led all digital currencies to decrease their prices.
On the other hand are the constant measures the Federal Reserve issued regarding the interest rate increase.
Although the strongest digital currencies are Bitcoin and Ethereum, which have shown a relative decline, they have maintained their value, which suggests that in one way or another, an inverse trend will be generated, that is, upward.
Effects on the Metaverse
Technological advances are closely related to the Metaverse. However, they are primarily based on the Blockchain platform, not only linked to cryptocurrencies.
The Metaverse continues to evolve, and the various companies worldwide continue to invest in this new project that is just being formed.
Some big companies investing in the Metaverse are Disney, Sony, Meta, and Microsoft, among others.
The economic and financial situation will inevitably impact everything related to technology since its actions, more than in the digital and stock markets, have temporarily decreased.
If cryptocurrencies continue to decline, the most common action will be the sale of digital currencies by their owners, aiming to recover the invested capital.
Unlike the Metaverse, which is constantly developing and evolving, the fact that digital currencies increase or decrease in value does not interfere with their valuation.
This new technological environment that merges finance and technology is only in an initial phase; the use of cryptocurrencies will be at the moment when users want to make any transaction.
The Metaverse is being created with solid foundations in a 100% technological ecosystem, where financial aspects only have a direct influence on the large corporations that hope to invest since they are the ones that have the capital to carry out the investment actions.
Cryptocurrencies are decentralized, but in this challenging situation of regulation, control, and measures to reduce inflation, it is not contributing to its normal development; it only remains to hope that encouraging forecasts begin to emerge.