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"Why is crypto crashing is probably the most frequently searched question in this industry. Believe it or not, but the reason why crypto crashes tends to be the same regardless of the cycle.
In the short term, the primary reason is long liquidations, usually triggered by a bearish crypto catalyst, a bearish macro catalyst, or a combination of both. Understanding this dynamic is important to keep cool.
This begs the question of how long it will take for your crypto to recover. The answer depends on the macro and crypto circumstances that caused the crash.
Today, we tell you a bunch of rules of thumb to follow. Enjoy!"
~ Coin Bureau
The video explains that crypto market crashes are caused by a combination of leverage and specific bearish catalysts. Leverage, which is trading with borrowed money, is described as the main driver of short-term price movements. It can lead to cascading liquidations, where a small price drop triggers forced selling, amplifying the crash before a sharp recovery. This process is initiated by either macro or crypto-specific catalysts.
The video further categorizes these catalysts into two types. Macro catalysts are external factors like changes in monetary policy or geopolitical events that affect the broader financial markets. These can cause crypto prices to fall in tandem with stocks. Crypto catalysts are developments unique to the crypto space, which can be temporary or permanent. A temporary catalyst, such as a community dispute, might lead to an overreaction and a market bottom before a rebound. In contrast, a permanent one, like an insider selling off tokens, could cause a project to underperform for a long period. The video concludes by stating that understanding the specific catalyst is essential for determining if a crash is a short-term dip or a long-term downturn.
0:00 Intro
0:26 Long Liquidations And Crypto Crashes
5:05 Macro Catalysts For A Crypto Crash
7:45 Which Bearish Macro Catalysts To Watch
10:28 The Worst Macro Catalyst
12:16 Crypto Catalysts And Crypto Crashes
17:00 Will My Crypto Recover?
Source - Coin Bureau YouTube: https://www.youtube.com/watch?v=2WROfSCsu9M
Disclaimer: This video is provided for informational purposes only, and not offered or intended to be used as legal, tax, investment, financial, or any other advice.
