03.02.2025 13:12
Cryptocurrency markets are facing a new wave of decline. The recent drops in the crypto markets, along with the loss of value in Bitcoin and altcoins, are causing concern among investors. Compared to the declines during the Covid-19 pandemic, as well as the FTX and Luna crises, the losses this time appear to be much greater.
Cryptocurrency markets have recently entered a new wave of decline due to the unexpectedly high performance of artificial intelligence applications based in China and the clarification of the U.S. Federal Reserve's (Fed) interest rate policies. While Bitcoin has lost over 5% of its value, losses in altcoins have reached around 15%, and the total market value has decreased from $3.6 trillion to $3.3 trillion. However, the markets are showing signs of a faster recovery this time compared to past crises like FTX and Luna, managing the process with limited losses.
Cryptocurrency Declines in the Shadow of Past Crises: What Should Investors Do?
The cryptocurrency ecosystem is once again experiencing sharp price movements. As the markets are still healing from the wounds of Covid-19, the collapse of FTX, and the Luna disaster, the new downward trend has reignited concerns in the sector. Particularly, the sharp value losses in Bitcoin and alternative cryptocurrencies are increasing investors' anxiety.
After the Covid-19 pandemic in 2020, which changed all dynamics worldwide, the collapse of the FTX exchange in the last quarter of 2022 left deep marks in the sector. During that period, Bitcoin's value decreased by 18%, leading to a significant erosion in the total market value. The Luna crisis that occurred earlier that year began with the collapse of TerraUSD and affected the entire cryptocurrency ecosystem.
Looking at the current situation, the success of Chinese-based artificial intelligence applications with much lower processing power than their competitors and the clarified outlook on the U.S. Federal Reserve's interest rate decisions have triggered a new wave of selling in the markets. During this process, where Bitcoin has lost over 5% of its value, the decline in alternative cryptocurrencies has reached around 15%. The total market value has quickly decreased from $3.6 trillion to $3.3 trillion.
Compared to the past FTX and Luna crises, the current situation shows that declines in the market are happening more quickly but with more limited effects. This suggests that the cryptocurrency market has become more resilient compared to previous crises.
Recent developments in the cryptocurrency markets, although causing less damage than past crises, have led market experts to emphasize that investors should act cautiously and closely monitor market conditions. According to expert statements, each crisis period shapes both the market structure and investment strategies, while the volatile nature of the cryptocurrency world makes it essential to be prepared for potential crises.