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Cryptos in the Bear Market- How Long Will the Crash Last?

 


Are cryptos in the bear market?

By definition, a bear market is a broad market index that loses at least 20% in value over a two-month period. Colloquially, one can also speak of a bear market when the current mood is generally pessimistic. Cryptocurrencies have now arrived in a bear market. But what are the reasons for the crash of currencies?


Why are cryptocurrency prices falling?

There are currently several reasons that negatively affect the prices of cryptocurrencies. Even if Bitcoin, Ethereum & Co are not directly affected by the Ukraine war or geopolitical crises, this still weighs on prices. Equities in particular are suffering from the current uncertainties on the market. As the crypto industry has gradually aligned itself with the stock market over the past few years, there are currently similar flows of money in cryptocurrencies as in tech stocks. Tech investors are mostly forward-thinking and enthusiastic about technology. As a result, tech investors tend to invest in cryptocurrencies as well. If money now flows from tech stocks, money is usually withdrawn from cryptocurrencies in the same way. As tech stocks have struggled in recent months, cryptos have been dragged along.

What are the reasons for the tech crash?

In order to understand when crypto prices will recover, it is therefore extremely important to understand the crisis in the stock market.

What influences tech?


Tech stocks had one of their worst starts to a stock market year in 2022. The reasons for this are diverse. On the one hand, the Ukraine war is a burden, which is causing general uncertainty on the market. However, the conflict also increases energy prices, inflation and a shortage of certain goods such as oils or other agricultural products could follow. In addition, there are particularly great risks for the European market as far as the supply of important raw materials such as gas or oil is concerned. Should an EU oil or gas embargo follow, as currently announced, this could cripple the European economy.


Interest rates, inflation, growth

In addition to the Ukraine war, however, other factors are having a particularly strong impact on the tech market. This applies above all to the sharp rise in inflation . The general price increases are currently leading to massive economic risks. But what tech shareholders fear most is fighting inflation by raising interest rates. Rising interest rates are massively reducing the attractiveness of tech investments. As bonds rise, tech stocks fall as future corporate earnings priced in by rising interest rates are worth less in the present. Furthermore, the partly gloomy growth prospects are weighing on the market.


When does the bear market end?

Due to the many risks and limited opportunities, the stock market is currently in a clear bear market. This is now increasingly spreading to cryptos. Cryptocurrencies are also affected by interest rate increases, inflation and, above all, rising energy prices, but not to this extreme. The crypto market will therefore only recover with the stock market. When this will be the case is written in the stars. Anyone who now owns cryptos should probably not sell them. Although prices could fall further, a lot of negative things are already priced into the market. If you want to invest now, you should do so in several steps.

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