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Is Cryptocurrency at a Dead End?
Investors have been caught by an enormous fall in the cryptocurrency market, with the industry suffering a $1 trillion loss in market cap. Crypto giants such as Bitcoin($43,865) and Ethereum($3120) faced a 50% loss in their market prices, not to mention other currencies such as Shiba INU facing similar, if not heftier, losses.
Why has it fallen off so hard? Numerous regulations have been imposed on the crypto market: for example, China, in an attempt to encourage its domestic market and increase their share prices across the board, have cut the rates of any international rates, and cryptocurrencies have obviously been impacted.
Similarly, shareholders in India have been forced to give up 30% of the profit they make from transactions. Suppose you invested RS 500 and made a profit of RS 200, thus selling it at RS 700: 30% of that RS 200 profit would be given to the Indian government.
It would be unfair to isolate cryptocurrencies as the lone fallen soldier; numerous financial markets have been hit due to a multitude of reasons specific to these individual markets. In the last 18 months, Dow Jones has had a range in market points of around 18,000, with a fluctuation of 3,000 points in the last 3 months, corresponding to a 10% fluctuation.
The growing popularity of NFT’s on social media platforms such as Twitter and Instagram as well as the recent purchase of Activision(a popular game developer, most notably of Call Of Duty Warzone) by Microsoft have diverted attention from crypto markets.
One could say it is ‘no longer the hot topic on the street’.
However, terming the crypto market as ‘Dead’ would be an injustice, with multiple experts suggesting that it is merely experiencing a blip.
Mudrex’s Patel has recently commented on the situation: “With several institutions bringing in billions of dollars, it is a good buying opportunity”. The volatility of the crypto market must be made apparent to anyone who is investing; you’re in for a roller coaster ride.
Cryptocurrencies, particularly Bitcoin and Etherum, have experienced many highs and lows in the last 18 months, with Bitcoin prices reaching nearly $68,000 but plummeting to $20,000 within the same timeframe.
In the last few days, Ethereum prices have risen back up to $3,120, implying that the fall was merely just a dip in the roller coaster, with a return to the top seemingly pending.
Written and collated by Aman Farooq
Written with input from The Mint, Economic Times and the Press Information Bureau of India
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