The top cryptocurrencies on the market entered an active correction phase after a substantial shift in attitude on the cryptocurrency market, losing up to 5% of their value, and here are the likely reasons, according to CoinMarketCap.
Market oversaturation
Market oversaturation is usually the main cause of any short-term correction following a big market pump. Whenever market circumstances improve, traders become more active, bringing more buying power to the market.
As time passes, the equilibrium between asks and bids deteriorates, resulting in volatility spikes. When liquidity falls and selling pressure arises, most assets lose a portion of their value before recovering. Traders become less psychologically stable as a result of technical oversaturation, and they tend to take profits earlier than necessary.
Hack Axie Infinity
One of the biggest exploits in the industry, as well as the biggest hack of 2022, has already caused a disruption in the cryptocurrency community, which could have resulted in a loss of funds from projects associated with the GameFi industry, causing fear in the market as a whole.
Axie, Convex, and Kadena are among the market’s largest losers, all of whom are connected to the GameFi or DeFi businesses in some way.
The market needs to refreshff
A substantial part of the cryptocurrency market has increased by up to 50% in capitalization and value over the past two weeks, which is significant, especially for such a volatile asset. Assets almost never go “parabolic” and gain value without correction, according to history and statistics.
We’re seeing the same thing right now, with most assets, including Cardano, Solana, Ethereum, and even Bitcoin, needing to cool off and get greater trading volume and funding in order to continue their upward trajectory.
