Mining City Reviews Why is Crypto Down?

Cryptocurrencies are infamous for their extreme volatility, easily being worth hundreds of dollars one day and the next down to pennies. Even so, the most recent downtick of the cryptocurrency markets has investors and onlookers alike apprehensive about the future of these technologies and decentralized finance in general.

The crypto crash of spring 2022 is just one part of the negative sentiment within the world economy. The reasons why crypto is experiencing this decline are widespread and not as obvious as they may seem.

Keep reading to learn more about what causes the crypto market to crash as well as predictions for the future of crypto and the blockchain.

Factors That Affect Crypto Markets?

Many factors affect the short and long-term fluctuations of the crypto market, the most obvious and simple being a principle applied to traditional investment opportunities: higher demand means a higher price.

Scarcity

This theory goes hand-in-hand with higher demand driving prices upwards. If there is a high demand and a low supply, this is when prices will increase the most but at certain percentage spreads it can decrease the price when more coins or tokens come into circulation. This spread tends to be 40% available, 60% of coins in reserve for most currencies but it is important to fully research a currency before deciding to invest.

A common way for crypto projects to counteract the effects of inflation and a decrease in prices is to “burn” coins by making them unrecoverable in order to control the supply.

Cost of Token Production

Crypto miners are an essential part of many crypto projects and the work they do is rewarded with tokens or a fee on the blockchain. This makes crypto mining a lucrative endeavor for individuals with the right hardware to pursue but if the rewards don’t outweigh the energy cost used to produce new tokens then there is little reason for miners to continue.

This means that when the cost of crypto mining increases, the value of a cryptocurrency can also increase to cover the higher amount of rewards and fees paid out to the miners.

Trading Volume

A high trading volume can indicate the strength and demand for a token which can increase its value. In reality, this is achieved by having a token available on a large number of cryptocurrency exchanges and platforms because it means that more people have access to buy and sell the token, or use it to complete transactions.

Competition

In theory, competition is beneficial for any market and will positively raise the price of goods. However, when it comes to cryptocurrencies, there is a constant stream of new tokens launching and becoming available every day.

A lot of these new tokens are trying to cash in on the crypto hype with plenty of meme coins or coins minted by celebrities flooding the market without providing much real value or a robust infrastructure to support transactions and trading.

Regulation

Part of the reason why cryptocurrency is so decentralized is that governments haven’t found ways to regulate how it operates other than taxing people cashing out on their tokens. Doing so can raise the cost of investment in crypto without adding much value to any individual coin. However, avoiding this taxation is fairly easy because most legislature that covers cryptocurrency only targets select coins.

When entire countries, like China, ban the mining of cryptocurrency or decentralized transactions, the market can take a serious dive as companies have to shift their resources to new locations and large portions of potential investors are cut off from the blockchain.

Why Are Investors Dumping Assets?

Cryptocurrency has never been an investment opportunity for those filled with fear, uncertainty, and doubt (also known as FUD in the investing space). These kinds of people have a low-risk tolerance and are also highly risk-averse so they often panic over the daily changes in market prices and rates, even when it comes to traditional practices and relatively safe investments.

This economic downturn for cryptocurrency is testing investors. Those who are dumping their assets at the first sign of trouble are likely to be the same people who will be buying crypto again if and when it rises to premium prices for fear of missing out (commonly referred to as FOMO).

Will Crypto Rise Again Soon?

It’s hard to tell whether or not cryptocurrencies will make a return since the technology is still relatively new compared to traditional means of investing like stocks and bonds. Any advice or hope for cryptocurrency to rise again is speculative at best but it isn’t impossible for crypto to rebound even after these heavy losses.

Individual cryptocurrencies have been down by an extreme margin before and are still around today. Bitcoin and Ethereum are some of the most prominent examples of the resilience cryptocurrency can have.

Bitcoin has lost over 80% of its value on several occasions but is still the most well-known currency on the crypto market, so some may see the current “crypto winter” as relatively mild in comparison.

Ethereum also experienced a 95% fall in prices during 2018 but has recovered and gone on to produce positive average returns over the next few years.

Is Now a Good Time to Invest in Crypto?

Some people argue that now is the perfect time to invest in crypto because prices are dipping so low but depending on your risk tolerance you may not be able to handle how your money disappears as prices drop even further before they recover (if they ever do).

If you do choose to invest, thoroughly research any asset you are considering before making an investment to try and safeguard your liquidity.

What is Mining City?

Mining City is a platform that provides mining plans, giving users access to hash power and mining rewards. The idea for the platform was conceived in October 2019 by Greg Rogowski, the brand owner of Mining City and the CEO of Prophetek. 

Prophetek is the company behind the Mining City platform. It is based in Cyprus, a country with clearer cryptocurrency regulations than many other European countries. 

A technological process, combining low electricity costs with storage and miner improvements, known as “Smart Mining,” became an effective way to obtain BTC.

Is Mining City Legit?

Mining City provides real hash power for users. Mining City also leaves banned markets and takes a compliant approach to new laws and regulations, adjusting to global markets.

There have been many widespread scams and attempts to defraud cryptocurrency customers over the past several years, which has prompted increased regulation and efforts by responsible companies to deter fraudulent activities and scams. 

The cryptocurrency and crypto mining industries are new and gradually become more and more regulated markets. As new regulations go into effect, reputable market players, like Mining City adjust.  This may mean leaving markets where crypto-related activities face new bans. That may also mean having to adjust products or services to stay in line with new laws. 

You can follow Mining City’s official social media portals on Facebook, Instagram, Telegram, YouTube and Twitter to observe what Mining City undertakes to adjust to new regulations and requirements and to give Mining City your support in their efforts to become fully compliant.

Conclusion

The crypto market is experiencing a nasty downturn along with the rest of the global economy. Whether or not crypto is able to rebound depends largely on investor sentiment and if the economic outlook can take a turn for the better.

Remember that the information written in this article is not financial advice and is provided solely to inform.