- The cryptocurrency is losing its sense of rarity because many coins are in circulation in the crypto market.
- Cryptocurrencies are showing similar traits and, hence, reversing the dynamic price movements.
- Many financial experts and strategists are suggesting implementing risk management to avoid bad consequences in the future.
Cryptocurrency’s value is very similar to the value of precious metals, as both are limited in quantity and have select use cases. Cryptocurrency has applications across the financial service industries. But the cryptocurrency is completely volatile because there is no centralized authority for its regulation because it is decentralized based on blockchain technology. The crypto market keeps fluctuating due to its everyday activities. The value is decided by the people in the market, or investors or buyers of crypto, that are running the whole system.
Reasons for Cryptocurrency Losing the Sense of Rarity
According to a senior markets strategist, Ed Moya, the crypto house is on fire and everyone is just trying to rush for the exit. There are a few reasons for cryptocurrency losing its value, such as:
- Cryptocurrencies share similar traits these days, which move them against the more dynamic price movements of, for example, fiat currencies, other altcoins, and real asset-backed stablecoins.
- Many different crypto coins are coming onto the market, and hence, rarity is decreasing as quantity is increasing. The number is inversely related to the value of the product. But this doesn’t mean that more cryptocurrencies shouldn’t come into the market. Some thorough research and future effects should be considered before launching any new cryptocurrency.
- Cryptocurrencies are not immune, as the world’s most popular cryptocurrency, Bitcoin, has fallen by about 70%. Ether was also down by 70%. Dogecoin has also faced a fall in the market.
Impact on the Crypto Market
There is a bad impact on the crypto market due to the decrease in the rarity of cryptocurrency. A few major problems will be experienced by the market due to this in the future; loss of investor’s money as people have invested lakhs into the market and billionaires and millionaires have invested an unexpected amount of the money. Employment scarcity, as so many people are employed in the crypto market, may cause them to get fired or lose their jobs just due to a drop in the value of cryptocurrencies, and many more unexpected movements can be experienced by the crypto market due to this major problem.
Conclusion
Cryptocurrencies are flourishing and proliferating these days, and the crypto market is experiencing different heights of success due to an increase in people’s interest in the field. The financial industry may revolutionize in the future due to cryptocurrency, or it may see a different situation due to the fluctuations. Cryptocurrencies are facing a decrease in their values. The most appropriate reason is that many coins in circulation are damaging their rarity value. But we cannot predict the future; hence, risk management should be implemented to avoid experiencing unwanted consequences
