Sometimes we all get to hear the news of the collapse of the crypto market or the term crypto cap, while these terms in themselves show that these are the negative representation of the financial system. And crypto being subjected to high price volatility and market fluctuations, has always a new unexpected event roaming around it, so what can one do? The simple thing one can do is to analyze the factors, study the previously worked financial models that have been worked well in the situation of the financial crisis.
However, sometimes we might also ignore some situations that are not even circulating in a good manner, therefore these market-related effects and events can’t be neglected. Today our topic is based on the Domino effect, an effect that has entered the crypto world! If you are interested in bitcoin trading visit bitvestment.software .
What is the Domino Effect?
Now in these recent weeks, we have seen many price flipping and market caps occurring in the crypto finance world, which has not only led crypto companies to sell their crypto assets but also a long way tussle is going on between centralization and decentralization of finance.
What’s the pretty reason that has led to such massive change? These declines are the results that have been rising due to the domino effect, which is sometimes also raised due to the contagion effect.
These effects are the international level price crashing which often takes place at the time of cross-border transactions. Now Domino effect means the serialized occurrence of the events that are followed in a very successive manner after an unexpected event occurs.
What are the factors of the Domino effect?
The effect predicts that your one single reaction leads to the occurrence of several chain reactions happening subsequently, which means if the prices are crashing, the next step will be selling off the crypto assets, which would not only lead to a decline in price but also the downfall of the monetary value.
Now the factors that are causing the Domino effect in the crypto world are as follow:
- Forking of cryptocurrencies
- ICO repercussions
- Offloading of Cryptocurrencies
What is the cause of this Domino effect?
Now here we will be discussing these factors as a cause, as the first one says about the forking process, so suppose a bitcoin fork occurred that led to a chain split event immediately hitting the blockchain of bitcoin.
Now after the chain split event, a psychological imbalance occurred that not only led to law enforcement having two different charges on the Initial Coin Offering.
Now the large number of ICOs will not only create the process of liquidation of the left-over token holdings but it will also lead to filling the reimbursement money.
This will lead to more downward pressure creating the crypto world, and likewise, the process will result in a chain reaction which is the key point for a domino effect to occur.
Tension building due to domino effect
Domino effect is neither good nor a bad effect, it is simply a chain reaction that performs according to your path of decisions, like if you are unable to control the harm, the harm will increase its strength multifold times and would go on expanding its area of affection.
Likewise, if you are reading books regularly, then slowly you would start writing a journal and then journal may lead you to write a story, in this case, we see that the effect is positive.
Hence, we must learn that if there is a drop in the price of any coin, that will again go to the next level if not taken care of, the situation will be of lower-low conditions that only indicates the further multiplications of unfavorable events.
The Bottom line
Many market analysts warn against the effect of domino chain reaction because it would further lead to aggravating situations that wouldn’t bring good fortune, hence the only way to tackle the situation is applying the concept of market rationalization that supports the characteristics of market dynamics in the times of hard market and price volatility.