When the market begins to tumble, some investors become concerned. However, there are so many methods to profit from falling markets that there is no need to act in panic.<h2>What is a downtrend?</h2><img src="https://lh3.googleusercontent.com/8TVb0LWtxCAJkZ1MKAnMviPhZn-SAmuWQ2DXLTfCeVLZn-kGCVxTLhSzG3ccoJunWar2u9JrUQtuS19klgaIUkUesRJBMWXE-DJj-adV_PJ2_8ESNQTt7JGiC9Ugpdot_YL6Z00ThduzGbIiSFLBa5A" alt="Should investors be afraid of or take the chance of &quot;downtrend&quot;?" title="Should investors be afraid of or take the chance of &quot;downtrend&quot;?" width="624" height="388">A downtrend is a downward price movement caused by lower lows and lower highs. A downtrend depicts a financial asset's price movement when the overall tendency is downward. Each consecutive peak and trough in a downtrend is lower than the ones observed earlier in the trend.As a result, the downtrend is made up of lower swing lows and lower swing highs. The downtrend is regarded intact as long as the price makes these lower swing lows and lower swing highs. When the price begins to make higher swing highs or lower swing lows, the downtrend has been called into question or has flipped into an uptrend.<h2>How to spot a downtrend?</h2><img src="https://lh6.googleusercontent.com/hwsLF7ggRAG5zApmOleKb18fn1-rFChl7sVE4BCnRIhus-CWcvJwE-sbHhjRtkXch6YGSi4d1YrJet9mMsxHMf-2SJJrfLH6SPhrPZSbaE0swsed-GB1Jp57jAopup-p4kwU2oeyNKjEzI2o37TFvcA" alt="Should investors be afraid of or take the chance of &quot;downtrend&quot;?" title="Should investors be afraid of or take the chance of &quot;downtrend&quot;?" width="600" height="338">While prices may fluctuate up and down, downtrends are distinguished by lower peaks and lower troughs over time. Downtrends are important to technical analysts because they indicate more than just a random losing run. Assets in a downtrend appear to be more likely to remain in a downward trend unless some market circumstance changes, meaning that a downtrend indicates a fundamentally worsening position.When the market has volatility, the market chart can reflect all upward to downward trend fluctuations. Though the specifics vary from case to case, three aspects of this transformation are consistent:<ul><li>Price movement is lower than the most recent drop.</li><li>The following peak underperforms its predecessor.</li><li>The unfavorable trend suggests that it will persist.</li></ul>The first indicator of a downturn occurs when supply surpasses the demand in the price activity. The number of ready sellers and the amount of security they want to sell exceeds the number of ready buyers and the amount they want to buy. Market participants believe that the security's current price is excessive.The second indicator is the growing number of market participants who believe they no longer need to buy (or own as much of) the security. The number of suppliers increases while the number of purchasers decreases.The third indicator is frequently followed by news or new information that verifies the suspicions of individuals who have decided to abandon the market or are no longer considering purchasing the asset. More purchasers withdraw, and new sellers rush to seize profits or limit losses.<h2>4 reasons for the downtrend market recently</h2><img src="https://lh4.googleusercontent.com/RIEXIEvOPRqM9r0Tj_rHJy29-5nq0SJrLxEa95eA1zo6S5OVTP-lGT-Cab3FNHXkfJJuXKIZnTv6xGgjAKUZyxLxykukKGeit2nbHraiZ7ECOb-H3SBljvXv5uvqfr7iVvMiVHJUUzZ8HBLg_ZVQ9pU" alt="4 Reasons for the downtrend market recently" title="4 Reasons for the downtrend market recently" width="624" height="351">The bitcoin market falls to a new low day by day. Bitcoin, the world's largest cryptocurrency, has fallen to an 18-month low of $18,084.27 USD (June 19). So far this year, it is down by around 60%. Meanwhile, Ethereum, the second-largest cryptocurrency, plummeted more than 25% to $1,040.According to CoinMarketCap, the global cryptocurrency market has shrunk from $1.02 trillion to $819,96 billion (Jun 20). All major cryptocurrencies have recently been trading in the red, putting even long-term investors to the test. Here below describe some of the factors that contributed to the massive crypto-market catastrophe.<h3>Luna-Terra crash</h3>It all started with the Luna-Terra debacle. It was a disastrous incident for not only its investors but for the entire crypto economy. Many investors lost their whole life savings in Terra currency, a stablecoin with a market valuation of more than $18 billion prior to the meltdown.<blockquote class="">“One of the biggest things which caused the downturn of the market was definitely the Luna situation, which was obviously devastating for the market.”Johnny McCamleyFounder and CEO of CryptoClear</blockquote>(CryptoClear is the first financial services developed an Exclusive Members Area to make crypto asset investing and trading clear in the crypto market as well as NFTs, Metaverse and more)With Luna losing 99.9% of its value, Terraform Labs (the firm behind Terra) devised a strategy to sell their entire Bitcoin reserve in order to restore the peg to $1, which they ultimately failed to do. As a result, it wiped away more than $40 billion from the cryptocurrency market.<h3>The stock market</h3>The cryptocurrency market is also tied to the equities market. If there is a slump in the stock market, the same is happening in the crypto-sphere. Many of the same factors that influence the stock market also influence cryptocurrency values.According to Investopedia data, cryptocurrency prices increased and decreased similarly to equities prices in late 2021 and early 2022. It can be seen significantly in the S&amp;P 500 chart that tech stocks like Amazon, Tesla, and Apple have dropped more than 6%. And a similar pattern was observed in the cryptocurrency market.According to a New York Times analysis, Bitcoin's price moves closely mimic those of the Nasdaq, a tech-heavy benchmark. While cryptocurrency markets should theoretically behave independently of traditional markets, they have historically been vulnerable to events in the mainstream financial world.<h3>Interest rate hike</h3>The US Federal Reserve has agreed to raise interest rates in order to reduce inflation. According to a Wall Street Journal story, the Fed will pursue an aggressive campaign to raise the cost of debt, restrict spending, and reign in record-high inflation. The fast rise in interest rates is widely seen as a leading indicator of a recession.Following the announcement, both the stock market and the crypto market experienced significant declines; investors lost trust and began selling off their digital assets, resulting in carnage in the crypto market.<blockquote class="">“With CPI going through the roof, money is being printed through the roof as well. 30 something percent of the dollars in circulation were just printed and injected into the market. That's definitely a reason that the market is collapsing.”Johnny McCamley</blockquote><h3>Celsius Network collapsed</h3><a href="https://www.builder.news/news/what-role-did-celsius-play-in-the-recent-market-crash" alt="What role did Celsius play in the recent market crash?" title="What role did Celsius play in the recent market crash?" target="_blank" rel="" class="">Celsius Network</a>, a Decentralized Finance platform, declared that it had frozen all cryptocurrency transactions due to "extreme market conditions." Following the shutdown, there was a massive sell-off in which all cryptos plummeted.In a blog post, the corporation stated, "We are taking this necessary measure... to stabilize liquidity and operations while we take actions to preserve and protect assets." "Furthermore, in keeping with our commitment to our consumers, customers will continue to accumulate awards during the break."According to Reuters, as of May 17, the company had processed $8.2 billion in loans and had assets totaling $11.8 billion, according to its website. It stated in August of last year that it had assets worth more than $20 billion.<h2>Is there a decent investing opportunity?</h2><img src="https://lh3.googleusercontent.com/Pytic3MEnFL2xZwnO0TTCFkfsVjdgO8UQm13GTuRMjTCtVy5XSS9mq-Ikm4SlcRPZ053bDezDnMqtWlzJS8wV9l_1ZKywGEBsCckBPC2jN6xdI7_O_w0TrYofk-XexhEIzQhAe2UIns0Pm3D8QDOKZc" alt="Is there a decent investing opportunity?" title="Is there a decent investing opportunity?" width="624" height="351">Because cryptocurrencies are volatile and unpredictable, the bear flag pattern on a cryptocurrency price chart might be difficult to notice. The pattern appears basic on its own, but traders have difficulty dealing with it.If the retracement or flag is larger than 50% of the pole, the pattern can be deceptive. Don't rely on the pattern in such scenarios. The pattern may be incomplete at times, or the price may bounce after falling below the flag's support, triggering the stop-loss.To avoid this situation, traders must evaluate the accompanying volumes as well as other technical indicators such as moving averages and the relative strength index (RSI). Measuring volume and RSI will assist you in determining the strength of the pattern and the momentum that follows it. Using volume as a guideline also assists traders in making confident entry and exit decisions.The bear flag pattern is a highly dependable technical signal in cryptocurrency trading. Given the volatility of the markets, no signal or indicator can be completely reliable. To avoid losses, users should employ risk management measures such as setting a stop loss. Traders should also follow the 1% rule, which prohibits them from spending more than 1% on a single trade.When cryptocurrency crashes, someone who has been watching from the sidelines may believe that now is the moment to go in and "buy low." But the recommendation is to let yourself think twice before deciding to invest in Bitcoin or other cryptos. “It's very important to only invest what you're willing to lose in crypto, never invest money you cannot afford to lose.” - Johnny also gave investors some advice.Besides, one of the most common things to consider is the following things: team, technology maturity, and real-world use cases. In an interview with <a href="https://www.builder.news/" alt="Builder news website" title="Builder news website" target="_blank" rel="" class="">Builder.news</a>, Ken Arthur Bassig, Head of Research and Associate, <a href="https://magnuscapital.com/" alt="Magnus Capital website" title="Magnus Capital website" target="_blank" rel="nofollow" class="">Magnus Capital</a>&nbsp;also shared his similar point of view.<blockquote class="">“There are four factors to evaluate a good project to invest in, which is FTSR: fundamentals, technicals or technology, sediment, risk.”Ken Arthur BassigHead of Research and Associate, Magnus Capital</blockquote>Investors should check the website, check discord, and check social media, because it will immediately be seen if it is good or bad. Investors can figure that out pretty quickly from the website, then they'll also look at the evolution of technology. If a newbie comes into the space, the essential things needed to do is years of research, to studies on why they want to invest in something and have that conviction as to why they want to invest.&nbsp;It is predicted that the situation in the market will improve over the next couple of months. Till next year, experts think what will happen is institutional capital will start flowing into the space again. And the sign for the uptrend of the market is people are already starting to buy up a lot of Etherium. What will happen is investors will start looking at Bitcoin and looking at other investments as well. Send these assets to the metaverse and that will lead to a run-up in the market conditions.<h2>Bottom lines</h2>To gain money over time, investors must protect profits during a downturn. When the major indices fall, most individual cryptocurrencies fall with them. Buying assets during a slump is thus dangerous. It is also crucial to monitor any equities investors already hold. Although it is tempting to buy assets on market pullbacks, investors should avoid catching a falling knife by waiting for market circumstances to recover.<div class="pr-block-special">Disclaimer: This article is intended for and only to be used for reference purposes only. No such information provided constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific name.</div>

Read this article below to know what to do in this downtrend situation!