Introduction
When it comes to investment, people in India generally opt for something where they can obtain maximum returns within a specific time frame and with minimum risks involved.
The digital form of currency that can be used to exchange value is the stock market, crypto market and bond market.
What is a stock market crash?
A stock market crash refers to a drastic, frequently unlooked-for, drop in the prices of stocks in the stock market. A stock market crash occurs when the market has entered an unstable phase, and a profitable disturbance causes share prices to fall suddenly and without any notice.
How does the stock market work?
The stock market helps companies raise money to fund operations by dealing in shares of stock, and it creates and sustains wealth for individual investors. By selling freehold stakes to investors, companies raise money on the stock market. Investors benefit by exchanging their money for shares on the stock market. As companies put that money to work growing their business.
What is cryptocurrency?
Cryptocurrency has a different craze among people these days. It is a form of virtual currency that operates in a decentralized ecosystem. Crypto can be sent and received from any part of the world. Crypto is available in the market in which a person can invest.
How does the crypto market work?
The Crypto market is a digital market Basically, this technology runs through multiple computers that take care of the entire transaction in a ledger format. It is impossible to delete this transaction, which makes it appealing for its secured nature. It also works through two-factor authentication, which is always the preferred choice of transacting virtually, no matter what systems you are using.
Why is the crypto market down?
The crypto market operates heavily based on enterprises. Indeed the slightest shadow of doubt over its performance can bring it down.
Some reasons due to which the crypto market has seen decline:
- Legalization
- Theft
- Investigation
- Outside influence.
What is a 4 years cycle in the crypto market?
The four stages of the crypto market 4 years cycle are:
- Phase1– Exponential highs
This phase is where the price of cryptocurrency increases quickly. Then people decide to buy crypto as they want to be a part of the increase as well.
- Phase2– Correction
During this phase, the price of cryptocurrency falls significantly from its all-time high and returns to a more reasonable price.
- Phase3– Accumulation
This allows people to buy crypto at a cheaper price than the last 2 phases.
- Phase4– Continuation
During this market, sentiment will change as it continues its move higher while passing its last all-time high from the phase.
When will the next stock market crash occur?
Everything from covid 19 variants to politics and history is a potential threat to the S&P 500’s historic bounce from a bear market bottom. The coronavirus pandemic isn’t over and it could continue to hurt the economy. As we experienced a downturn in 2020, this historical trend would suggest we are off the hook. So there will be a market crash in the next 3 months in 2022.
Few reasons why is the stock market could crash in April 2022:
- Omicron/ variant spread
- Fed speak
- Historically high inflation
- Margin debt
- Energy price indigestion
- A debt ceiling impasse
- Valuation
- The unwinding of the meme stock trade
- Investors stick with history.
Conclusion
Accordingly, a market crash causes stock market investors to incur significant losses. Always follow the golden rules for investing in the stock market. Only invest in coins you believe in, never invest more than you are willing to lose. Stay informed and learn as much as you can, including from your mistakes.
