2022 is not the best year for cryptocurrencies. While other sectors of the economy are in decline, cryptocurrencies are in free fall. Today we will discuss will crypto market ever recover and why crypto is crashing. Let’s find out by reading the article below.
Will crypto market ever recover?
Analysts believe that the crypto market will recover in 2023. By the end of the year, most of the bear market will have passed; however, a full bull market is not guaranteed based on Bitcoin price history. Some believe Bitcoin will bottom out in the first quarter of 2023, dropping to $10,000 or lower.
Why crypto is crashing?
While crypto crashes are nothing new in the world of digital assets, something has changed when it comes to Bitcoin’s price volatility. The cryptocurrency-specific events behind price action in the past are now turning into macro factors with a similar impact on global financial markets.
1. The downfall of FTX
While there are many factors affecting crypto prices, one of the most recent has to be the FTX-Binance dispute. FTX happens to be one of the major cryptocurrency exchanges that is almost on the brink of collapse. The FTX crash affected the entire market as well as major currencies like BTC, which fell by more than 70% after November 6.
2. Raising interest rates
Rising interest rates are the biggest culprit behind this year’s cryptocurrency crash and the reason for BTC’s recent losses. Since the pandemic, the U.S. and the rest of the world have been witnessing record-high inflation that has driven up prices.
3. Terra Luna Crash
Another reason for BTC’s plunge in the cryptocurrency market was the unpegging of the TerraUSD stablecoin from the U.S. dollar, which eventually led to the devaluation of the Luna cryptocurrency. In mid-2022, LUNA fell by more than 95% in one day, causing many cryptocurrencies to suffer losses and face a continuous decline in the price chart.
4. BTC price continues to fall
The LUNA crash also had a considerable impact on the BTC price, which caused the BTC price to keep falling. From its all-time high of $68,000 in November 2021 to its current trading price of around $16,000, BTC prices have plummeted by more than 70%.
5. Speculation and manipulation
It is common for investors to sell assets when the cryptocurrency market falls to avoid further losses. This is exacerbated when whales sell their holdings leading to cryptocurrency manipulation and sending the market crashing by selling most of their holdings. Then, the crypto market triggers FUD or Fear, Uncertainty, and Doubt, further affecting the market down.
I hope this article will help you to learn will crypto market ever recover and why crypto is crashing. Many investors are concerned about the impact this will have on their cryptocurrency holdings, so if you're feeling nervous right now, you're not alone.
