In this article, you will learn why is crypto crashing. Although crypto crashes are not something new in the domain of digital assets, there have been certain changes when it comes to Bitcoin's price fluctuations. What used to be crypto-specific events behind the price movements are now changed to macro factors that have a similar influence on the global financial markets.
Why is Crypto Crashing?
-The downfall of FTX
While there are a number of factors that are influencing crypto prices, the recent one is certainly the FTX-Binance dispute. FTX, which happened to be one of the major crypto exchanges, has faced an almost collapse. The FTX crash has affected the entire market along with the major currencies like BTC, which have fallen more than 70%.
-Increasing interest rates
The rising interest rates have been the biggest culprit behind this year's crypto crash as well as why BTC is going in red lately. Since the pandemic, the United States and other parts of the world have been witnessing record-high inflation that resulted in price hikes .
For this reason, a number of central banks along with the US Federal Reserve have increased the interest rates in order to bring down inflation by reducing the money circulating. One of the reasons behind the continuous drop in BTC prices is surely the high-interest rates that have been dictating the crypto price performances this year.
-Terra Luna crash
Another reason behind BTC's plunge in the crypto market is the de-pegging of the TerraUSD stablecoin from the US dollar which has ultimately led to the devaluing of the Luna crypto. In mid-2022 LUNA fell over 95% in a day which caused many cryptocurrencies to suffer and face a continuous decline in the price chart.
- The continuous drop in the BTC prices
The LUNA collapse has also affected the BTC prices quite heavily which contributed to the constant decline in the BTC prices. From its all-time of $68k in November 2021 to its current trading price of around $16k, BTC prices have plunged more than 70 %.
- Speculation and manipulation
It is quite common for investors to sell their assets whenever the crypto market is dropping to avoid further losses. This very scenario gets intensified when the whales sell their holdings that cause crypto manipulation and make the market plunge by selling off a significant portion of the . The crypto market then triggers FUD or fear, uncertainty, and doubt that further influence the drop in the market.
Can Crypto Bounce Back?
Many coins will likely cease to exist as this latest crypto winter winds down. Many penny cryptos, for instance, which are highly speculative and volatile investments, may crash with no hope of revival. But so-called “blue-chip” cryptocurrencies, including Bitcoin, are more likely to weather the storm.
Regardless of price, coins in the top 500 by market cap are more likely to yield positive returns over time. This article is about why is crypto crashing.
