What is causing the crypto market to crash? The cryptocurrency markets have plummeted to a new all-time low for the year. The worldwide market capitalization has dropped to $1.02 trillion from $1.10 trillion the day before.
What is causing the crypto market to tumble?
Cryptocurrency markets hit a new low for the year (13th June, 2022). The worldwide market capitalization has dropped below $1 trillion, to $977 billion, a drop of about 12% from yesterday. This year, the worldwide cryptocurrency market valuation has dropped by roughly $1 trillion, and almost all of the leading coins are now worth half or less than their all-time highs.
The immediate cause of the crypto meltdown appears to be a big sell-off by investors in response to rising inflation fears, as well as a halt in withdrawals by cryptocurrency lending firm Celsius. Investors are also continuing to steer clear of riskier assets, as evidenced by the stock markets.
Since the weekend, Bitcoin, the largest and most popular cryptocurrency, has gone below $22,000, while practically other altcoins, beginning with Ethereum, have seen their prices decrease.
Ethereum is currently trading at $1155, its lowest level in over 14 months. According to CoinMarketCap data at the time of writing, Solana has dropped more than 15% and is hovering around the $27 mark.
The crypto price drop, according to experts, indicates that investors’ risk appetite is waning. They’re plainly wary about high-risk investments. With all of its uncertainty and volatility, crypto is regarded as one of the most risky financial vehicles.
“The Federal Reserve has been putting pressure on the crypto market in recent months by raising interest rates to prevent inflation. “After a broad sell-off following statistics showing US inflation hitting a 40-year high, Bitcoin, Ethereum, and most cryptocurrencies suffered losses over the weekend,” said Edul Patel, co-founder and CEO of crypto investment platform Mudrex.
“Since Friday, as investors appear to have panicked, the number of crypto liquidations has been significant. Bitcoin and Ethereum both fell by as much as 7% and are now trading at their lowest levels of US$25,000 and US$1,300, respectively. In the following days, the bearish trend is likely to persist,” he warned.
While altcoins have typically underperformed Bitcoin, they now face the added threat of regulatory stumbling blocks. According to a CoinDesk analysis, only a tiny number of cryptocurrencies are expected to survive such market fluctuations.
Rising food, gas, and energy prices, according to Shivam Thakral, CEO of crypto exchange BuyUcoin, are placing great pressure on the crypto market, with Bitcoin and Ether seeing double-digit losses in the last 24 hours.
“Financial markets throughout the world have suffered a significant decline after the consumer price index recorded the biggest inflation since 1981,” Thakral remarked.
“In the coming weeks, the market is projected to remain bumpy, and countries around the world continue to record high inflation rates.” “We expect seasoned investors to take advantage of the present slump in crypto pricing, which allows them to acquire crypto at 2021 levels,” he added.
Most investors are concerned, according to Darshan Bathija, CEO of crypto exchange Vauld, that unless inflation levels start falling soon, the US Fed would have to tighten the reins by raising interest rates faster than expected.
Bitcoin is in an oversold state
“Bitcoin saw yet another major slump, falling to roughly $25,000, its lowest level in over five months. The Dollar Index (DXY) is also at a six-month high, having gained 2% in the last day alone, causing the stock and cryptocurrency markets to fall. The BTC trend has broken below the long developed triangle formation on the daily timeframe. The cost of emergency and critical assistance is projected to be $24,000. In a commentary, analysts at WazirX Trade Desk wrote, “The RSI dipped below 30 as Bitcoin reached the oversold zone.”
Meanwhile, Ethereum has corrected by more than 20% in the last week, while Ethereum against Bitcoin has declined by more than 11% in the same time frame, as Bitcoin’s Dominance has surpassed 48% for the first time in almost a year.
“The ETH-BTC daily chart has broken below the falling channel pattern and has gone below its prior support of 0.055. “The next level of support for ETH-BTC is projected to be at 0.038,” they said.
