Since the start of the year, bitcoin has lost 13 percent of its value, and in late January, it had lost almost 27 percent of its value. Despite predictions and extrapolations, the cryptos have seen significant crashes. In the mid of July 2021, bitcoin lost nearly 45 percent of its value, which is the primary cause that new investors keep their distance from crypto trading. There are risks associated with every business, and with the use of the right strategy, you can minimize the losses or even make profits during the dips. KuCoin offers the most versatile trading platform, and with the use of trading bots, you can prevent any significant loss.
In this article, we will discuss the reason for crypto crashing and how you can avoid losses during the crash.
Why Crypto Crash
There are many reasons behind the crypto crash, and they all are interlinked. The crypto coins can fall overnight, so it is better to store them in the form of KCS when not investing. Crypto exchange platforms have a significant role in avoiding crashes.
Lack Of Liquidity
The lack of liquidity is the primary factor in the crash and fall of the crypto coins. Unlike the traditional markets, there are not many buyers waiting to buy bitcoin released in the market. The lack of buyers creates the demand and supply gap where the decrease in value fills the excess demand. Platforms with more audiences have more liquidity, such as KuCoin, with one out of 4 active crypto investors outside the United States.
Too Much Leverage
Most crypto investors use the debt to finance their crypto trading. The miners know the supply and demand trends in advance, so they regulate the coin’s crypto mining pool by predicting the coin volatility shortly. As a result, the prices drop, and investors start to liquefy their assets. When the cost of the crypto declines, the hash rate also decreases. Similarly, the market also goes down with the drop in the hash rate.
The lack of a central marketing system is the primary cause of the security flaws in the crypto market. Security breaches are the primary factor in decreasing the investors’ trust, and they have started to liquefy their assets. Mass liquefaction results in the fall of the market. Some cryptocurrency exchanges, such as KuCoin, provide the best crypto security features to avoid security breaches.You can also view the live chart such as, BTCUSDT and ETHUSDT from KuCoin trade page.
Influencers Causing Volatility
The Crypto market is heavily influenced by celebrities and famous personalities who support one coin. If the influencer supports one coin, it starts to go up, and as a result, people start to convert their assets to these coins. The liquidity decreases, and supply and demand gaps occur that may result in a market crash. Stable coins such as KCS are prone to this type of crash and are the best way to store the crypto when not investing.