I went to bed Friday evening only to see that prices went extremely red. They had been red already, but I immediately understood that something had happened. It kind of reminded me about the morning I woke up to red prices, and I knew that Russia had invaded Ukraine. So, the markets normally respond to such things in extreme ways, especially the crypto markets. But, why is that?
Have you ever thought about the word FUD? We normally speak of FUD when some troll on Twitter is spreading all sorts of information about projects to cause fear, uncertainty, and doubt about a project. Of course, asking valid questions isn't FUD, it is research. But, there are times when people spread false information about projects to make people sell... simply because they hate the project, or because they are a competitor, or because they want to buy more at cheaper prices.
But, notice the word in the middle of FUD... uncertainty.
Uncertainty causes immediate reactions in the markets...
As Iran missiles and drones against Israel, it causes uncertainty in many ways. What will happen now? Will Israel respond? Will the United States be a part of a future response, or will Israel be left on its own? Will the Middle East turn into one giant war zone?
We ask so many questions... and it is also pre-programmed that people sell crypto as such events happen. That is why we can see that the price decrease we saw for many tokens already returned to where they were before the missiles were sent. Other tokens still suffer, but uncertainty for sure plays a vital role in all of this.
Where are we going from here? Who knows... :)
I was curious why everything went red as well. I can't imagine war having an effect on crypto but I guess it does kind of affect everything.
It is programmed into us, everyone who has followed the crypto markets for a while can feel that. As China banned cryptos in September 2017, people sold (and that was understandable as it actually impacted crypto markets directly), but prices still boomed a few weeks later. When Russia attacked Ukraine, people sold, but then prices quickly got back. Now people sold as Iran attacked Israel, but I believe this was mostly just the "automatism" of selling because we know that the markets will react negatively to such an act, but then people also know that this isn't really gonna affect crypto that much, so it is rather a game of catching the bottom before the price returns back up.
But, I am much more curious on how the halving will affect the markets short-term... long-term I don't worry, but short-term... it might become a real rollercoaster!