It has been an eventful week in the crypto markets. The issue that has occurred across the market of Bitcoin and almost all altcoins has been named differently by a variety of different actors. Some call it a sudden dip, but others use a more diplomatic term and call it a correction of the market.
Regardless of the type you’re using, there has been a decline in almost all altcoins, and it is pretty significant. In this article, we’ll try to explain how and why it happens and whether it has any repercussions for the future.
What Happened?
Almost all cryptocurrencies experienced a sudden drop, and once it happened, it was a textbook drop that started with Bitcoin and moved on to altcoins. As a rule, as Bitcoin drops by 5 percent, all the altcoins drop about 20 percent, and that’s what happened this time.
Experience has also shown that when Bitcoin has a V-shaped rise and quickly recovers, altcoins take a longer time to follow along. This has led some investors to drop their altcoins at the first sign of trouble. In the long run, that’s a mistake since altcoins tend to recover after a while.
What Altcoins Were Affected?
The first altcoin to be affected was Ethereum, which is the biggest one. It has fallen about 50 percent more than Bitcoin, which is the pattern we’ve seen before. This has led to a dip for almost all other altcoins, including those that use the same blockchain network as Ethereum.
The biggest altcoins to follow and dip in price after Ethereum are Cardano (ADA), Avalanche (AVAX), and XRP (XRP). Smaller altcoins with niche markets have followed along, and when put together, it has led to quite a big loss for the crypto market in general.
How Much Was Lost?
The reports claim that about $750 million worth of assets have been lost due to the dip. This goes across the board and includes all the crypto coins that have been affected. Therefore, the dip isn’t the biggest one in history, but it can be compared to some of the losses that have recently shaken the market.
Another similar incident happened this year on August 5th, when a similar amount was lost. One of the things that make crypto trading attractive is the ability to use such dips to make a purchase, and many investors have done just that.
The Broader Effect
Altcoins and Ethereum are especially used as payment methods in a variety of industries. This ranges from Ethereum casinos to payments made in the shipping and logistics industry. Therefore, some have wondered if the dip has had a broader impact on those industries.
At this point, there’s no such effect, at least not noticeably. Those who use crypto coins as a payment method are usually aware that they are volatile financial assets that can change in value. They continue to do so due to the many advantages the use of cryptos provides.
The End of the Crypto Momentum?
Cryptocurrencies have been on the rise for years now, both in terms of value and in terms of overall acceptance. There are some who claim that we may be seeing the end of that momentum. This mostly means that the overall rise of crypto value will be slower rather, and we’ll see more dips, such as the latest one.
The best way to prepare from the standpoint of the investors is to see how the altcoins will react and which will recover the fastest. They should adjust the portfolios and drop those that take a long time to recover.
The Mid-Term View
Even though drops such as these can be worrisome, and some risk-averse investors may cut their losses, in the wider scope of things, we’re experiencing one of the best crypto runs. Ever since Donald Trump won the election, the crypto market has been on the rise. This is no surprise, as the new administration will be more crypto-friendly.
For instance, Bitcoin has risen from $39 billion to $60 billion in the past month. This has further similarly affected altcoins, as this dip did. All of this implies that buying and holding cryptos is the best strategy for both the mid and long-term.
To Sum Up
Altcoins across the board saw a 20 percent dip last year. It happened after Bitcoin took a dive, as it usually happens. The dip was significant, and it ended up liquidating over $700 million.
In the long run, however, it’s one of the best times to buy altcoins, and the market has already started to recover, with some altcoins recovering faster than others. Most investors will use this time to clear out their portfolios and get rid of the coins that take a long time to bounce back.
