Why Did The Crypto Market Crash
Following Teslas decision, the market was already experiencing a turbulent time before China announced a clampdown on cryptocurrencies which saw prices plummet.
China banned all of its banks and financial institutions from offering clients any services involving cryptocurrencies, which included coin offerings and transactions.
The countrys financial industry bodies also warned against speculative trading.
The National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China released a combined statement.
It read: Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of peoples property and disrupting the normal economic and financial order.
China has since ordered Bitcoin mining in its Sichuan province to shut down completely and told banks to stop supporting crypto transactions, in a latest wave of restrictions on cryptos which have seen prices tumble.
Why Is Crypto Crashing
A crypto market crash is very unpredictable and its nearly impossible to foresee the next crypto market collapse. The below analysis of the previous crashes in 2018 and 2021 is helpful to understand the processes and see patterns. Its also important to stay informed about the market at all times and be aware of how the policy world can impact cryptos. Doing this will help prepare investors to understand why crypto is crashing, when the next crypto crash will happen, what to do when crypto crashes, and what are the reasons for these cryptocurrency price drops.
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What Has Tesla Done With Its Bitcoin Holding
Meanwhile, its worth remembering Tesla is still in possession of its Bitcoin holdings, despite its environmental concerns, as confirmed by Elon Musk on Twitter.
In response to criticism of Bitcoins drop in price, Musk said: To clarify speculation, Tesla has not sold any Bitcoin.
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Investing In Your 401
It might sound old and boring, but your tried and true 401 is a much better spot to park your investment money than cryptocurrency. No, it probably wont be trending on a Reddit forum, but guess what? Its way steadier than crypto and has a proven track record over time.
And instead of trying to time to market, placing your bets on whatever crypto is up and coming, and then selling when its hotyoure going to set your 401 and forget it. Okay, were not talking about forgetting that it exists or anything. You just need to keep investing and leave it aloneaka dont pull your investments just because someone told you to. Nope, not even if a global pandemic comes along. Remember, investing is for the long haul, and youve got the big-picture goal in mind here. In order to see the payoffs from your investment, youve got to stick it out. Simple as that.
P.S. You should hold off on investingperioduntil youve paid off all your debt and have a fully stocked emergency fund. Once youve landed there, youre ready to start investing. We call this Baby Step 4.
So, stay away from playing the Will My Crypto Crash? game, and stick to the way less hyped plan of long-term investing in your 401. And if this whole investing thing just has you scratching your head, dont worryyoure not alone there. Thats why you should let a trusted pro help walk you through your investing options. Talk with one of our SmartVestor Pros today!
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Is It Worth Investing In Cryptocurrency
In short, investing in cryptocurrency is risky.
The market is new, and volatile. It is hard to predict what will happen next: while it may rise for a week, it can suddenly crash.
This latest crash has wiped out most of the gains made throughout the pandemic which had come from a flurry of investments, more options to pay for things using Bitcoin and hype around meme coins.
There’s no guarantee that you will make a profit on any money you invest in crypto, and there’s a chance you can lose it.
Nobody can completely predict where the industry will go, and the market value is susceptible to the opinions of experts, government decisions and – sometimes – tweets by Elon Musk, so it’s worth keeping that in mind.
How Could A Bitcoin Crash Happen
If youre holding any investments, you want the prices to keep going up. After all, investors are always on the lookout for more profits. Can the prices fly high forever?
The short answer is, No. Weve already talked about the most recent bitcoin crash from a few months ago, and meanwhile, the stock market crashed in 2008.
Experts warn that the stock market is due for a correction, meaning the prices may drop soon. Worse, this might take the crypto market with it too.
Before we continue, when we say bitcoin crash, its not just about a bitcoin price crash. Instead, its about a crypto crash that involves crypto prices crashing significantly.
Its called a bitcoin crash because more people are familiar with bitcoin. Now that weve cleared that up, here are the things that could cause this event:
- Governments Various countries are trying to create CBDCs or Central Bank Digital Currencies to replace cryptocurrencies. Whats more, many of them are cracking down on these digital assets, especially in China. If they stop people from using bitcoin, the entire cryptocurrency market may crash eventually.
- Quantum computers Blockchain powers all cryptos, and theyre secure because we dont have computers that can take down all its nodes. That may change soon as China claims to have created a . If its that powerful, it might cause a flash crash for all cryptos.
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Why Is The Whole Crypto Market Crashing
As Bitcoin is the biggest cryptocurrency, its value has a knock on effect on smaller coins.
Alongside the reasons outlined above, Twitters CFO Ned Segal also publicly denounced crypto, which could have affected investor decisions. He said that investing in crypto doesnt make sense right now.
Experts also predict that Bitcoin could continue to plummet.
Ethereum And Other Leading Cryptocurrencies Also Tumble In Value
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The price of bitcoin has plunged below $60,000 amid a market-wide crash.
Ethereum , Binance Coin and Solana were among several other leading cryptocurrencies to also tumble in value, dipping by between 5-10 per cent on Tuesday morning.
The price crash comes less than a week after bitcoin hit a new all-time high of close to $69,000.
The overall crypto market fell by more than $200 billion overnight to around $2.6 trillion, having briefly teased $3 trillion during the record-breaking rally last week.
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Bitcoins Value Has Sunk Back Below $60000 Having Reached An All
Billions were wiped from the cryptocurrency market after Bitcoin and other major coins crashed on Monday night.
Bitcoins value sunk back below $60,000, having reached an all-time high of around $69,000 on 10 November.
Most coins have recovered slightly after the crash. As of Wednesday afternoon Bitcoin was valued at around $60,000.
Ethereum lost more than 11 per cent of its value on Monday night, and is now at around $4,200.
The overall cryptocurrency market fell by more than $200 billion overnight, to around $2.6 trillion.
Investors Used The Crypto Crash After China’s Ban To Buy The Most Bitcoin In Four Months Last Week: Coinshares
- Investors put $50.2 million into assets backed by bitcoin in the week to September 24, the highest since April, CoinShares said on Tuesday.
- Ether-backed assets saw $28.9 million worth of inflows, the most since early June.
- The continued inflows suggest investors saw China’s ban last week as a buying opportunity and not a deterrent.
Investment in bitcoin hit its highest in four months in the week to September 24, when China announced it would ban trading and mining of cryptocurrencies, triggering an aggressive sell-off that traders used as a buying opportunity, according to CoinShares’ weekly report on Monday.
Assets backed by bitcoin drew in the most investment, with inflows of $50.2 million over the week ending September 24, the most since the week of April 19, the data showed.
There was also $28.9 million worth of inflows for assets backed by ether, the most since June 7. Solana-backed assets saw inflows worth $3.9 million and cardano-backed products registered inflows of $2.6 million.
These inflows continued despite China’s clear ban on all crypto-related activities on the mainland on Friday that resulted in a steep drop in crypto prices. Bitcoin fell almost 6% to below $42,000 and ether tumbled almost 8% to hover around $2,800 before steadily recovering in the days following.
“The continued inflows suggest the recent headwinds for digital assets, such as the widened China ban, were seen as buying opportunities for investors,” the report said.
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Crypto Is Crashing Today But Bulls Are Buying The Dip
Todays crypto woes once again largely stem from Bitcoin. The crypto surged over $20,000 since late July in an effort to reach the same highs above $60,000 it saw earlier in the year. Recently, it came close to the $50,000 mark, and lots of bullish sentiment had built around Bitcoins return to form. Over the weekend, however, Bitcoin refused multiple times to cross the $50,000 threshold. This is prompting some to take profits and flee, thus lighting the fuse of a big crypto selloff.
Bitcoin is dropping 7.5% as a result of the big sell. Of course, this is prompting a flash crash due to Bitcoins market influence. Ethereum is dropping nearly 9%, as is Cardano. Meanwhile, Binance Coin is down nearly 10%. Nearly every coin of the top cryptos by market capitalization are trading down this morning.
Of course, crypto bulls are not concerned with crypto crashing today. Rather, they are rallying others to buy the dip, prompting a #buythedip trend on Twitter. Thousands of posts on the platform are calling for crypto holders to deepen their wallets with this buying opportunity.
On the date of publication, Brenden Rearick did not have any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Article printed from InvestorPlace Media, https://investorplace.com/2021/09/btc-eth-ada-bnb-why-is-crypto-crashing-today/.
Short Crypto During Rallies
Can you short crypto during sudden rallies? Yes. This is one of the best times to short any coin. During these rallies, the assets are overbought due to the fear of missing out . After the hype dies down, the coin comes back to its original value or declines, providing you with a chance to make profits.
The Possibility Of A Crypto Winter
The crypto market is no stranger to volatility. But few phrases evoke more fear than the threat of impending crypto winter.
Crypto winters are basically prolonged periods of stagnating or declining crypto prices. In the past, they’ve come one and a half to two years after a Bitcoin “halving.” A Bitcoin halving is when the reward per block mined is cut in half. They occur roughly every four years. Given that the last halving was in May 2020, many predict that a crypto winter will set in sometime within the next six months. However, the reward per blocked mined is much less than it used to be, and nearly 90% of Bitcoin’s supply is already in circulation. Given this backdrop, halvings should have less impact over time.
Quite honestly, it doesn’t make sense for Bitcoin and other crypto prices to go through a fairly predictable cycle of bullish and bearish years as they did in the past. But because it happened the last few halvings, and there’s widespread consensus that it could happen again, we could very well see a situation of “sell the rumor, buy the news.”
Remember That Volatility Is The Name Of The Game
Cryptocurrency is volatile by nature. Because crypto generates no cash flow, traders have to rely on changes in sentiment to drive the price. That means the market can swing between rabid optimism, as it did in early 2021, to pessimistic despair, as it did a few months later. The furor around the Coinbase IPO also helped drive positive sentiment to crypto.
So when you have an asset thats driven by sentiment, you have to realize that the emotions of traders propel the market. Thats true in the case of stocks, too, but they also may have a real stream of growing cash flows from their issuing company to accelerate them higher.
This volatility is exactly what draws professional traders, who use high-powered algorithms to make sophisticated trades, something that mom and pop traders dont typically have the advantage of utilizing. Traders like volatility since it gives them a chance to make money thats Wall Streets game.
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Here Are 5 Ways To Profit From The Crypto Crash Without Buying Volatile Coins
Whenever cryptocurrencies like Bitcoin or Ether tank, the thought of buying the dip and riding crypto to its next dizzying peak can be awfully seductive.
But prior to last weeks crash, which saw the price of Bitcoin shed about $8,000 between Sept. 7 and Sept. 10, the worlds most famous cryptocurrency has experienced multiple events where it has lost at least 30% of its value in a matter of weeks.
That kind of volatility isnt for everybody.
Luckily, there are ways to capitalize on cryptos current bounce without purchasing any actual cryptocurrency: by investing in companies who have tied themselves to the crypto market.
Here are five crypto stocks that might be worth buying with just your spare change.
What Does Shorting Crypto Mean
Shorting crypto is the process of selling cryptocurrency at a higher price, with the aim of repurchasing it at a lower price later on, ideally in situations where a crypto assets price is expected to fall.
The reason its called short selling is that youre short of the coins. You dont actually own the crypto that you intend to profit from. To understand shorting, you need to be familiar with crypto long and short positions. When you go long, it basically means that youre buying cryptocurrency, expecting its market value to go higher. For instance, you buy an altcoin at $10 and expect its price to hit $12. You sell it once the price increases in order to make a profit.
On the other hand, shorting means you borrow a cryptocurrency and sell it at the current market price, expecting it to fall. Then, you buy the coin when its price falls or retraces slightly, making a profit which is the difference between your selling and buying prices.
Heres an example:
- You intend to short one Bitcoin when its value is $45,000, since you expect its price to fall in the next few days.
- You borrow a Bitcoin from a broker and sell it for $45,000.
- A few days after you borrow the Bitcoin, BTCs price falls to $40,000.
- You buy a Bitcoin for $40,000 and return it to the broker.
- Now youve made a profit of $5,000, minus any interest that you have to pay the broker for borrowing the Bitcoin.
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What To Do When Crypto Crashes
As stated above, no one can predict the future of the market and no one knows when the next crypto market crash will happen. But that doesnt mean investors dont have options to prepare themselves for these unforeseen events. For example, traders can employ diversification strategiesoutside of crypto to hedge against potential market downturns. Also, more advanced traders can use futures to balance the market direction with their portfolios. So if you see that Bitcoin is going down again, then maybe that is a signal to adjust your investment strategy.
Prices Of Major Cryptocurrencies Continue To Drop Here’s How It Could Affect You
Cryptocurrencies have taken a beating over the past few weeks, with several of the biggest names in crypto plummeting. The price of Bitcoin is down nearly 50% since April, Ethereum has dropped by around 53% since May, and Dogecoin has plunged close to 60% over the past six weeks.
Stock market downturns are always nerve-wracking. But even the most volatile stocks don’t often fall as fast or hard as cryptocurrencies.
If you’ve invested in the crypto market, should you be worried about the most recent crash? Here’s what you need to know.
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