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At the time, it was the worst economic downturn since the Great Depression. Almost every business and trading sector was in trouble, with traders suffering in business. It was a highly dark time, but the market, once more, understood that nothing was “too big to fail.”

Before the financial crisis of 2008, the economy was flourishing. Businesses needed a place to put the enormous amounts of money they made. Due to the high demand for possible “safe assets,” Treasuries and other assets (similarly supposedly stable) were in short supply.

Financial engineers developed “safe” dollar-equivalent securities and products to help stay afloat. Real estate satisfied the demand.

These products were running based on real estate or other similar entities. The idea worked until the housing market downturn came up. It was when the entire economy threatened to collapse.

The future seemed suspicious when the lending regulations were loose and interest rates were historically low. These factors encouraged a housing bubble in the US and around the world. However, this bubble could only sustain itself for a short time.

Collateralized Debt Obligation (CDO) offerings from banks destroyed the economy, leading to an economic downturn.

Lehman Brothers, a giant, was also a part of the organizations destroyed during this. Bank of America bought Merill Lynch, and the Federal Reserve even saved AIG. The shock waves impacted the stock markets worldwide.

The crypto market soon faced trouble as the same pattern played out in cryptocurrencies. But there wasn’t any asset like real estate at the bottom of it. The only currency cryptocurrency traders use is the US dollar.

Major cryptocurrencies like Bitcoin, which frequently increased or decreased by 10% daily, became popular for extreme price changes.

As a result, the market developed “stablecoins .” The stablecoins blockchain tokens, with a fixed value of $1, are exchanged as stable dollar equivalents over the blockchain. The stablecoins removed the need for banks and eased the dealing process.

Stablecoins also save the time-consuming paperwork associated with financial regulation, anti-money-laundering laws, and the need for a bank account with all this.

The market capitalization of cryptocurrencies reduced to 70% during the 2022 downfall. Therefore, leveraged and exposed crypto companies got into trouble, plunging the whole market.

Several lending institutions like Celsius, BlockFi, and Three Arrow Capital also became a victim of this downfall. After being lured in by high-yield returns, retail professionals were left to bear the brunt of the consequences.

Furthermore, similar to the 2008 financial crisis, firms were justified in taking excessive risks because of secrecy, novel financial instruments, and a generally unregulated environment.

While this happened, some gave in to their greed, and others remained doubtful about the cryptocurrency market. Consequently, more questions were being raised regarding the unstable situation that followed FTX’s bankruptcy.

Since March 17, the price of Bitcoin has been falling inside a bearish head and shoulders pattern, per reports. This pattern often leads to breakdowns and significant drops in the crypto value. The pattern’s neckline costs $27,500, i.e., the current rate. It could trigger a sharp decline towards the $23,200 0.5 Fib retracement support level if BTC breaks down below it.

All of these patterns indicate the possible breakdown of the crypto market. The crash is similar to the financial crisis of 2008 and could have long-term impacts on the market if not handled. The BTC crash could impact gamification, VR, and several AR projects based on these cryptocurrencies.

It’s important for crypto traders or enthusiasts that want to step into the market to educate them. Learning about the crypto market and the changing trends could help them determine future trends.