The cryptocurrency market has come a long way from its origins as a niche pursuit by a small group of enthusiasts. According to CoinMarketCap, a company that tracks cryptocurrency market engagement, cryptocurrencies’ overall market capitalization once again exceeded $2 trillion in March 2022. This is a staggering increase from the approximately $24 billion total market capitalization seen just five years earlier, in March 2017. However, the cryptocurrency market has experienced its share of ups and downs during this period of growth and understanding the nature of these shifts is key to successful market engagement. At IM Academy, a leading online financial education platform, students are learning to analyze shifts in the cryptocurrency market and develop well-informed cryptocurrency market strategies.
What Causes Cryptocurrency Market Shifts?
Effective market engagement involves not just tracking the shifts in the market, but developing strategies based on an understanding of the causes of these shifts. When it comes to cryptocurrency, there are a variety of factors that affect market engagement, but three factors with a particularly strong impact in 2021 and early 2022 are geopolitical events, growing public awareness, and increased accessibility of cryptocurrencies.
1.) Geopolitical events
Cryptocurrencies are decentralized, meaning they aren’t regulated by any national or international economic policy. However, cryptocurrency market engagement is not immune to impact by geopolitical events, as evidenced by Russia’s recent invasion of Ukraine.
According to Fortune, the cryptocurrency market lost approximately $200 billion in value during the initial week of Russia’s invasion. However, following the announcement of strong economic sanctions against Russia by the U.S. and EU, the market rebounded, with the more popular cryptocurrencies, particularly bitcoin and ethereum, seeing significant increases.
Russia’s war with Ukraine is a prime example of how a complex web of geopolitical and economic factors can influence the cryptocurrency market. The conflict has had a wide-ranging impact on everything from foreign exchange rates to commodities prices and inflation, and volatility in these areas can drive market engagement in cryptocurrencies not controlled by government policy.
2.) Public awareness
Cryptocurrency continues to receive a steady increase of media and advertising attention. As cryptocurrency market participants react to this stream of news and more new participants become aware of market options, the market can shift with news cycles.
The 2022 Super Bowl was a prominent example of the expanded public profile of cryptocurrency. Several cryptocurrency companies, including Coinbase, crypto.com, and FTX, paid for advertisement slots during this widely viewed event, and the presence of cryptocurrency companies in these expensive slots received extensive media coverage.
The advertisements appeared to have worked. According to TechCrunch, cryptocurrency apps saw a 279% increase in downloads following the game, suggesting the mainstream visibility of cryptocurrency is leading to more widespread market engagement.
3.) Accessibility
In its earliest days, individuals required a specialized understanding of cryptocurrency and blockchain technology to exchange currencies such as bitcoin. But in recent years, several cryptocurrency exchanges have made accessing and exchanging a variety of coins accessible to anyone who downloads a simple app.
This increase in ease of accessibility has coincided with an increase in the number of different cryptocurrencies that market participants can access. Most cryptocurrency exchanges have expanded their offerings to include so-called altcoins, and options such as non-fungible tokens (NFTs) and decentralized finance (DeFi) are becoming more widely available. According to Bloomberg, the total market capitalization for NFTs exceeded $40 billion in 2021.
How Do IM Academy Students Learn About the Cryptocurrency Market?
Given the variety of factors that cause shifts in the cryptocurrency market, IM Academy is committed to providing students with a well-rounded understanding. IM Academy students can access online videos and readings that discuss several aspects of cryptocurrency market strategy and market trends.
While IM Academy offers distinct academies such as the FRX Academy for foreign exchange (forex), the HFX Academy for high-frequency engagement, and the ECX Academy for e-commerce, IM Academy students who want to focus on cryptocurrency take courses in the DCX Academy.
DCX Academy offers a collection of videos, readings, and apps that students can access at any time using the IM Academy portal or IM Academy app. Lessons provide a foundation for students by explaining concepts such as the blockchain and the distinguishing features of various cryptocurrencies. Other lessons dive deep into the relation between current events and news coverage on digital asset valuation and how to spot price gaps and market volatility.
In addition to readings and prerecorded lectures, IM Academy students also have access to GoLive online sessions, live conversations with IM Academy’s educators that are available to students seven days a week.
Finally, as part of the DCX Academy, students can access IM Academy’s Swipecoin app using a smartphone. The app illustrates market ideas with risk parameters.
Understanding a Shifting Market
The cryptocurrency market continues to grow, but it is still a young market and as market engagement in 2021 and 2022 demonstrates, there remains the potential for significant shifts. At IM Academy, students take a proactive approach to understanding the shifts of the cryptocurrency market, grounding their market engagement in a well-rounded knowledge of the variety of factors at play in this dynamic space.
Note: IM Academy is an educational forum for analyzing, learning, and discussing general and generic information related to markets and strategies. IM Academy does not provide personalized recommendations or views as to whether an investment approach is suited to the financial needs of a specific individual. Before deciding to participate in the forex or other markets, you should carefully consider your investment objectives, level of experience, and risk. Most importantly, do not invest money you cannot afford to lose. You should take independent financial advice from a professional in connection with, or independent of, research and verify any information you find on the IM Academy website.
Cryptocurrency-dominated investments may expose you to great risk. Cryptocurrencies are not FDIC-insured, are often not exchangeable for other commodities, are subject to price volatility, and have little to no regulation. Speculating in cryptocurrencies should only be performed by sophisticated investors who are prepared to lose their entire investment.
