The crazy market of cryptocurrency is unpredictable and highly volatile. It is a payment system that doesn’t depend on banks for transactions. Anyone can receive and send payments using cryptocurrencies. The cryptocurrency exists in digital form and doesn’t depend on physical existence like paper money. The mere existence of digital form invites challenges for legal regulation and puts the cryptocurrency in a spotlight of suspicion.
The market trend of cryptocurrencies like Bitcoin and many more has gone from the lowest to the highest and, for now, the prospect is bleak and highly risky. So, the price of Bitcoins has decreased more than a third since January 1st. The major reasons are hackers, widespread public distrust, and the unpredictable nature of Bitcoins. The crashing market of Bitcoin always threatens the investors and they often face bankruptcies too. Moreover, the dramatic fall of Bitcoins has many causes.
For a while, the banks in the U.S. adopted the zero-interest-rate policy (ZIRP) to stimulate the dying economy to help the citizens, and to fight against the whooping inflation. Thus, investors always find such situations less risky and consequently avoid the unattractive prospect of investment. To find a way out, people often adopt other methods to double their incomes and get financial independence. In this article, we’ll examine the reasons for the cryptocurrency crash and how it will impact the markets on a larger scale.
Cryptocurrency crash
Investors find a peculiar satisfaction in risky business deals. They find the cryptocurrency market a fair spot to double their assets and earn maximum profits. Despite the enormous price of Bitcoins and Ethereum, the cryptocurrency market is facing a troublesome crash.
The market capitalization of cryptocurrency has fallen to its lowest in ten months. Moreover, $130 billion has left the space, which has resulted in a market cap slump to $1.62 trillion. Similarly, Bitcoin and Ethereum lost their values during the Asian Trading Session. Bitcoin has lost its market value of 3.1% to $33,486 and Ethereum is further down by 4.2% to $2,443 since January 1st.
3 reasons the cryptocurrency is falling drastically
There are many reasons for cryptocurrency’s fall. Let’s take a meticulous examination of why the cryptocurrency is falling.
Hiking interest rates of Fed
There was a time when the Federal Reserve levied a very low-interest rate close to zero. However, that has changed since the Federal Reserve increased the interest rates to half a percent last week.
Since then, Wall Street has responded with a stock slump and similarly, cryptocurrency has faced more than a 10% market loss leading to a $200 billion loss over the past week only. More so, Bitcoin has lost 22% market cap and the tech-focused index is down 21%. This is just one reason cryptocurrency has taken a downhill journey in the age of digitization and technological evolution.
Cryptocurrency is lacking suitable regulation
The cryptocurrency market is drastically lacking the regulations. Unlike banks, cryptocurrencies like Bitcoin and Ethereum can go crashing with no prior notice. The year 2021 was a mere joke about institutional crypto investment.
However, the trend broke when big tech giants and pioneers such as Testa, El Salvador, and MicroStrategy invested in cryptocurrency. This trend instigated widespread pressure on U.S. regulators to bring the cryptocurrency into the proper regulation to avoid fraud and money evaporation. However, taking too much time to regulate has drained the people and they are now losing the trust of the cryptocurrency market even.
Cryptocurrency is a risky venture
Investors love business ventures which are risky and abundantly profitable. However, not a single investor you hear about saying that losing money is fun. So, investors are seeking a safe ground for investment in cryptocurrency. There is an ongoing Russian-Ukraine war, COVID-19, and the changing climate.
Investors are keeping their eyes on real-world issues acutely and analyzing their impact on their business ventures. Even some investors are trying to convert their money back to dollars to secure it from any fraud and misfortune.
Bottom line
Cryptocurrency is a volatile market place so the market trends are unpredictable and sometimes even beyond sanity. Even a minor distrust in the stock market can shake the foundations of Bitcoins and Ethereum. That’s why investors are avoiding investing in the cryptocurrency world. There are many reasons for cryptocurrency crashes, such as increased interest rates, unregulated Bitcoins, and risky ventures.