Why the encryption declined? 3 factors behind the last recession of Crypto

The encryption prices have decreased in recent weeks after a period of strong momentum, as Bitcoin fell about 12 percent last week and Ethiom decreased by 16 percent, sending many investors who retreat and hide the previous optimism.

Last month, Bitcoin fell by 18.5 percent. Ethereum, the second most popular, witnessed a similar turn, with a decrease in about 28 percent. ($ 1.5 billion theft of ETHEREUM from Bybit, which is a major encoder, by infiltrators also does not help.)

But what exactly caused the prices to drop?

3 reasons The encryption prices decreased

The encryption prices have been in a large -scale increase in the past few years, which was recently fueled by President Donald Trump and supporting his administration of digital assets. In fact, on the weekend before inauguration, Trump He launched his mechanicsSome investors have made millions overnight. The value of the currency fell by 53 percent last month.

But this recession is not only limited to Micoins. The wider encryption prices also decreased. Bitcoin, all cryptocurrencies, fell 22 percent since its highest level ever reached at $ 109,000 in January-which raises questions about where the market is heading and whether investors will be able to recover the gains they get before.

“The dramatic price fluctuations in Crypto this week are another reminder that it is a group of very speculative assets – not to faint the heart,” says Patrick Hui, the owner and lead consultant at Victory Independent Planning in Portland, Oregon.

Here are three reasons for the decline in encryption prices and what you need to know.

1. Trump’s tariff shook the markets

Prices of encryption do not necessarily move just like prices Shares Do, which are often affected by basic origins, cash flow and business performance. However, encryption prices are affected by the feelings of investors, the broader economic trends and politics applications. In this case, Definitions – Which led to a decrease in early February when it was scheduled to start at the beginning and is expected to start next week – it can affect the encryption prices in two ways.

• Customs duties can raise the price of goods, thus contributing to inflation and high interest rates.
• The customs tariff can create global tensions and disrupt supply chains, which contributes to market fluctuations.

When inflation and economic uncertainty is high, investors tend to move away from the most dangerous assets in general and are more attracted to the least fluctuating assets.

2. Inflation will not disappear

Emper You may also play a role in lower Crypto prices. When inflation lasts and the prices do not decrease, The federal reserve transfers its monetary policy And the interest rates remain higher (or the same) for a longer period. Unconsising assets such as Crypto can become less attractive because investors can gain guaranteed income or returns elsewhere.

Empty enlargement can also be invested in encryption due Your money becomes less valuable. In other words, if the inflation remains higher, but the encryption prices remain the same or decrease, then you lose the power of purchase on this investment, which can force investors to sell or put their money elsewhere.

From a practical point of view, when inflation is high for a sustainable period, investors have less money to spend, and they may be less likely to put what they have towards a speculative asset, such as encryption.

3. The Trump Rally diminishes

At the beginning of his presidency, many encryption investors were optimistic about the support they received from the Trump administration.

In fact, in the opening encryption ball, David Sachs, Trump and AI CZAR, said, “The era of terrorism against encryption has ended, and the beginning of innovation in America has just begun for encryption.”

But optimism once Bitcoin pushed to the highest level ever You may fade with the detention of economic and geopolitical fears newspaper headlines and investors are waiting to find out what a Executive encryption order And other initiatives bring.

Should you invest in encryption?

Buying DIP may seem tempting. After all, Many people have seen great gains with bitcoin And other encryption. However, keep in mind that the last decline is just another example of the volatility of the encryption.

Melissa Caro, founder of the pension network and stock sales dealers at FBN Securities Inc. says. “If you decide to include Crypto in your wallet, you understand that the purchase and celebration strategy may not result in the dramatic returns that you hear about in the success of encryption success-and will be high fluctuations.”

Effectiveness is not supported by solid assets, such as cash flow. Its prices only depend on what others want to pay against the currency – which can change quickly. Investing in encryption Not everyone and may not be in line with your long -term financial goals.

The bottom line

Encryption is risky as it happens. The recent decline in prices driven by customs tariffs, sticky inflation and negative investor morale are equality in the course when investing in encryption. For high prices, they can also fall within days, sometimes even minutes. If you invest in Crypto, just invest what you want to lose.

Elimination of editorial responsibility: All investors are advised to conduct their independent research in investment strategies before making an investment decision. In addition, investors are advised that the performance of previous investment products is not a guarantee of prices in the future.