How to Spot the Next Crypto Market Crash?

Recessions are signs of an economic downturn, and various factors can cause a bear market. Still, they generally include government intervention in the economy, struggling economy, collapsing market bubbles, pandemics, wars, geopolitical crises, and significant economic paradigm shifts, such as the move to an online economy. For the crypto market to crash is when the market is heavily volatile, and there is a large amount of selling by investors. You must develop your ability to interpret cryptocurrency market charts and become familiar with both bullish and bearish market traits if you want to be the first to spot it before anyone else.  

Crypto Market Cap 

Looking at the current crypto market capitalization (market cap) would be a crucial determinant for crypto investors because it allows them to see the market’s big picture and compare value across cryptocurrencies. 

The cryptocurrency market cap reached $3 trillion for the first time in November 2021 as the prices of Bitcoin and Ether hit all-time highs. Today, the value of the cryptocurrency market has fallen to $1 trillion.

Market cap can be used as a general indicator of how digital currency is likely. A cryptocurrency with a larger market cap is more likely to be a more stable investment than one with a smaller market cap. 

Digital currencies with smaller market caps, on the other hand, are more prone to the whims of the market and might see significant gains or losses in their wake. In short, the Cryptocurrency market cap helps investors discover how big a digital currency is and its demand on the market and understand the overall market situation. 

How to Calculate Market Cap?

A cryptocurrency market cap is simple to calculate. To determine the value of the market, it just multiplies the coin’s current value by the total quantity in circulation. For example, for an alternative coin with a 20 million coin supply and a present value of $100, we can determine the current market capitalization of cryptocurrency is $2 billion. 

Investors use the market cap to determine the coin’s value by multiplying the price and total quantity in circulation, indicating a coin’s performance. From CoinMarketCap, you will find ranging from Bitcoin, Cardano, Tether, Tron and CoinField coins and by comparing the market cap of several cryptocurrencies, you can make better informed investing choices. 

How to Read Crypto Market Chart?

The chart allows investors to spot market trends and forecast the future price movements of an asset. Investors must read charts and find the best opportunities in the market.

The most popular chart is the Japanese candlestick chart, which helps investors to detect new trades by looking at the candle; it would indicate the crypto market trend, whether it is bullish or bearish. Bullish or green patterns suggest that the price is likely to rise, while bearish or red patterns show the price is likely to decrease.

Open — The first recorded trading price of the asset within that particular time frame.

High — The highest recorded trading price of the asset within that particular time frame.

Low — The lowest recorded trading price of the asset within that particular time frame.

Close — The last recorded trading price of the asset within that particular time frame.

What Is the Crypto Bull Market?

A bull market is characterized by a rising tendency in a market’s pricing and refers to a significant market uptrend that exhibits meaningful price increases over a certain period. 

January 2017 kicked off an epic bull market; the crypto prices were skyrocketing during November and December 2021. Bitcoin, the most popular trade digital currency price, reached an all-time high of $64,000, making the overall market cap of cryptocurrencies surpass $3 trillion. A bull market happens when investors keep buying, and prices rise. 

The indicator for a bull run is when the market index value rises by 20% or more for at least two months. These price increases are more likely to be linked to the daily traded assets volume. 

What Is the Crypto Bear Market? 

Cryptocurrency market valuation reached $3 trillion in 2021 before falling and slumping below $1 trillion, which has lost $2 trillion in value since the peak of a significant surge in 2021, proving that what goes up must come down. 

The bear market happens when there is a harsh decline in cryptocurrencies’ market cap. It typically begins when investors start selling off their holdings of an asset as they start to lose faith in it. The more they sell out, the more devalued the assets become. The laws of supply and demand will take place, and the price of the coin will decrease if supply grows while demand stays the same or declines. The probably best ways to beat the bear market are to spread out your holdings, invest in industries that mostly do well during economic downturns and focus on the long-term gain.

Crypto Market and Positive News

Undeniably 2022 has been a challenging year for blockchain and cryptocurrencies, and the economic downturn hits hard on the market. It is worth looking back on the past year and seeing how many revolutionary events happened during the bull run. The following events and milestones made the crypto market mainstream.

In September 2021, Bitcoin was accepted as payment, and El Salvador added Bitcoin to its official currency. Bitcoin’s price rose to a new high of over $68k in November 2021. 

The Crypto market fueled the development of Decentralized Finance, or DeFi. The vast potential of digital currencies and DeFi platforms are shown in the DeFi market’s exponential expansion. Elon Musk puts on heavy support for the meme currencies (DOGE, SHIB), which helped them gain more traction in March 2021 

The emergence of fan tokens was skyrocketing, along with the growth of NFTs and digital ownership. The fans and supporters invest in their preferred artists, sports teams and brands, purchase the fan tokens then get rewarded for their loyalty, strengthening communities and fostering identity. 

The metaverse has gained worldwide attention because of the popularity of NFT games like Axie Infinity (AXS) and MOBOX (MBOX). The metaverse enables users to experience virtual reality, enhancing the new excitement of future gaming and social media. The metaverse will also keep catching the attention of people all around the world because of its ability to connect the virtual and physical worlds.

Summary

In 2022, the price of cryptocurrencies hit a new low, a significant sell-off made by investors and inflation fears put into the crypto crash. Still, it also gives an excellent opportunity for investors to buy crypto at a lower price. All investors must understand the circle of the market and learn to trade with the charts, and leave emotion behind. Tracking the crypto market movement and accessing the fundamentals of crypto figures will surely benefit all investors to make wise decisions. 

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