The bear market in the current sphere of cryptocurrency has brought fear, uncertainty, and panic among investors.
This precarious situation came into play when the market capitalization of global crypto went down under the $2 trillion mark in the January of 2022. Ever since the price of Bitcoin went down by around 70% from an all-time high of around $69,044, the current market of cryptocurrency has been falling short of the mark. Similarly, several other cryptocurrencies around the globe have also faced a devaluation like Solana, Ethereum, Avalanche, and Dogecoin.
Bear Markets Have Been A Cause Of Concern In Crypto Markets
Now, there are obviously a few factors that could bring about a bear market. For this particular market, the build-up was started all the way back in 2021. During that time period, most of the authorities in the regulatory bodies threatened to bring out laws that would be governing cryptocurrencies. Such a threat naturally created a sense of uncertainty and fear in the entire market. In 2021, the United States Securities and Exchange Commission famously issued a lawsuit against the cryptocurrency Ripple. Also, there were major news reports of China banning the mining of Bitcoin throughout- which also resulted in several miners of BTC relocating to other countries that would be favorable.
There have been a group of crypto analysts who are of the idea that the leverage that a crypto market provided was also used to create the bear market that has now threatened the market itself. Such leverage usually implies putting out a small bit of money which would be used as collateral to start borrowing a large amount of money to be invested. In such particular cases, most investors do borrow from crypto exchanges in order to start financing their own investments in the crypto market.