Wednesday, August 10, 2022

Why Is The Crypto Market Falling

The I Newsletter Cut Through The Noise


Bitcoin and other leading crypto coins experienced a significant drop in share price after investors began dumping mining equipment as China announced fresh regulations.

  • Bitcoin -3.65%
  • Binance Coin -1.18%
  • Tether -0.20%
  • Dogecoin -4.34%
  • SHIBA INU -4.33%

It follows recent crashes brought on by Tesla making a u-turn on accepting Bitcoin as payment for its products and China clamping down on initial coin offerings, block exchanges and warned against speculative trading.

A further blow was dealt when China ordered Bitcoin mining in its Sichuan province to shut down completely and furthermore told banks to stop supporting crypto transactions, in a latest wave of restrictions on cryptos.

Now the countrys central bank, Peoples Bank of China, has effectively banned digital coins after announcing all transactions of cryptocurrencies are illegal.

The decision has already had an impact on the global crypto market.

This is whats going on in the world of cryptocurrencies

Dogecoin Price Slump Continues After Doge Co

Dogecoin was trading down by approximately 9% on the last 24 hours at $0.16 on Monday morning.

Shiba Inu coin, the so-called Dogecoin killer is meanwhile trading down by roughly 11% on the last 24 hours at approximately $0.00003300 as of 11.17am today after smashing through multiple record highs in late October.

Meanwhile, Cardano prices are fluctuating around $1.26 in a 9.13% fall on the last 24 hours, XRP was down 9.39% at $0.75 and Solana at $178.67 as of 11.20am on Friday.

Bitcoin Extends Decline After Weekend Flash Crash

Representation of cryptocurrency bitcoin is seen in this illustration taken November 29, 2021. REUTERS/Dado Ruvic

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  • Buying seen at 200-day moving average -analysts
  • Since peak, bitcoin has fallen more than 30%

NEW YORK/LONDON/HONG KONG, Dec 6 – Bitcoin dropped by almost 5% on Monday as the start of the week offered little respite to the world’s largest cryptocurrency after a bruising weekend when, at one point, it lost over a fifth of its value.

The rout sent bitcoin’s price and the amount invested in bitcoin futures back to where they were in early October, before a massive price surge that sent the token to an all-time high of $69,000 on Nov. 10. Since that record peak, bitcoin has plunged 32%. It was last down 1.1% at $48,900.

Traders said the weekend fall was connected to a broad move away from riskier assets in traditional markets over worries about the Omicron variant of the coronavirus, combined with lower trading liquidity that tends to plague cryptocurrencies at weekends.

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There was strong buying support, however, at the 200-day moving average, market participants said, with bitcoin fluctuating between $48,000 and $49,000.

Sean Farrell, head of digital asset strategy, at Fundstrat cited bitcoin’s “outsized correlation to macro uncertainty,” compared with the rest of the crypto market.

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Five Risks Of Crypto Investments

BELOW we round up five risks of investing in cryptocurrencies.

  • Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
  • Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
  • Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
  • Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
  • : Firms may overstate the returns of products or understate the risks involved.

Why Crypto Is Crashing Now

Why The Crypto Market Is Falling Down

The crash follows President Biden signing the infrastructure bill into law. The $1.2 trillion bill might pave the way for broadband, roadway, railway, and resiliency expansion across the nationbut it also impacts crypto traders in a few significant ways. As a result, many crypto holders have trimmed their positions in an attempt to minimize the new law’s impact.

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Polygon Price Nears Record High

The price of Polygon is teasing an all-time high, reaching to within $0.03 of the peak it reached in May this year of $2.68.

It is the only one of the leading cryptocurrencies to be currently experiencing a near-record-breaking rally, with current discussions in crypto forums focussing on whether or not an all-time high is a good time to skim off profits.

Its been a remarkable year for the altcoin, which has risen by nearly 15,000 per cent since January.

What Is The Price Of Bitcoin And Ethereum

The price of Bitcoin was £35,440.35 after the latest drop in prices , according to Coinbase.

Ethereums value is now £2,914.50.

Cryptocurrencies are seen as an alternative to traditional banking methods, cheaper to move money around due to not being regulated by the government or its banks.

The decision by Tesla, and announced by Musk, was seen by some as a slight on the credibility of cryptos to become a viable method of payment against physical currencies.

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What Is Happening To Bitcoin

Bitcoin has been on a rollercoaster ride of late, rising and falling sharply on the back of a number of news stories.

To summarise, these dramatic ups and downs over the past few months:

  • 16 December 2020: Price hits $20,000 per coin for the first time
  • 13 April 2021: Value hits a record high of $63,375
  • 22 June 2021: Falls to under $30,000 for the first time in 5 months
  • 2 August 2021: Bitcoin rallies to its highest level since May at $40,000
  • 23 August 2021: Price returns to above the $50,000 mark
  • 20 October 2021: Price goes up to $67,000
  • 27 October 2021: Bitcoin crashes to $58,000
  • 5 November: Reached record high of $68,521
  • 4 December: Price fell to around 12% down to $42,000, falling nearly 30% peak-to-trough on a 24-hour basis.

Why Did The Crypto Market Crash

Crypto 101: Why Bitcoin, Dogecoin & Other Cryptocurrencies Are Falling

On Wednesday, 19 May, People’s Bank of China told financial institutions that they should ‘resolutely refrain’ from providing services to digital currencies because of their volatility.

As this news surfaced, the crypto market crashed. However, it is not unusual for the value of Bitcoin to change in such a short time period. Earlier, in December, Bitcoin closed under $30,000 but only after 3 months the prices rose to $65,000.

Speaking to The Quint, Ashish Mehta, Co-Founder, DigitX explains the panic in the market which may have been triggered by about three major rumours which may have impacted the decision of the sellers:

  • Tesla-Musk conundrum:Tesla recently announced that it wouldnt favour Bitcoin on ‘environmental’ concerns because Bitcoin mining requires electricity which is mostly generated using fossil fuels and therefore has a huge carbon footprint on the environment.

    However, this seems to be motivated and raises a few questions like didn’t the Tesla management already know about the Bitcoin mining before diversifying into it? Doesn’t Tesla cars run on the same electricity generated using fossil fuels?

  • The reiteration of a previously imposed Chinese restriction of 2017 did some good amount of damage as a fresh imposition of prevention of participation by financial institutions into the crypto space by the Government of China.

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    Why Crypto Market Lost $120b In A Day And $270 Billion In 1 Week

    Crypto market is loosing billions. There are three main reasons of falling cryptocurrency market:

    • FOMC Report:

    The U.S Federal Reserve signaled at the end of its monthly FOMC meeting on Wednesday that it will raise interest rates at least twice by the end of 2023 to 0.6%. Out of 18 Fed officials, 11 forecast at least two quarter-point interest rate increases for 2023 which is a sign that the central bank has begun asset tapering discussions. This caused the dollar index to gain significantly, thereby pushing Bitcoin and the entire cryptocurrency space bearish.

    Read: Our Report On Why China Is Cracking Down On Bitcoin Mining And Crypto Trading

    • Bitcoin Death Cross:

    The death-cross is defined by a cross of the 50-day exponential moving average below the 200-day EMA. The cross happened on Friday and it propelled the sell-off the market saw over the weekend.

    • China Crack Down On BTC Mining:

    Sharp falling BTC prices is because of Chinas Sichuan province halting Bitcoin mining. Thanks to Chinese authorities, it has become a lot easier to find and add new blocks in Bitcoin blockchain.

    26 mining companies were given strict order from China National Development and Reform Commission and Sichuan Energy Bureau to finish off their mining operation. BTC miners had to switch off their mining machines on Saturday.

    AntPool and Huobi.pool lost over 30 percent of their hashrate,Foundry USA was the only mining pool was able to remain in the green.

    Why Is Crypto So Volatile

    Why cryptocurrencies are so volatile, from an economic standpoint. They are necessary because of the secondary effects of innovation and market development resulting from competition, as well as the individual freedom of choice of consumers based on their specific budget constraints, which is a secondary effect of consumer rights.

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    There Have Been Multiple Developments In The Global Market That Could Have Contributed To The Bitcoin Price Drop Read To Find More About Crypto Crash Today


    Cryptocurrency investors sold off their digital assets on Saturday as the global crypto market plunged by over 17%. As much as $2.4 billion was liquidated earlier today, which is the largest depreciation since September. World’s largest cryptocurrency, Bitcoin fell to $47,164.64 down but over 16% in the last 24 hours. Among other cryptocurrencies, Ethereum also followed Bitcoin to dive by over 15%, sinking as low as $3848.23 in a day.

    While the market has streamlined since the steep fall earlier this morning, the total crypto market cap fell from $2.6T on Friday to $2.07 on Saturday. The total market value touched $3 trillion last month, for a very short time. As an observable pattern, the Bitcoin price drop is seldom accompanied by a price drop in other cryptocurrencies. There have been multiple developments in the global market, that could have contributed to the crypto crash today.

    Why Have The Crypto Markets Been Down

    Crypto Market Loses Billion  Why is Bitcoin price falling ...

    Cryptocurrencies have been especially volatile lately and there a few reasons why.

    Twitter’s chief financial officer Ned Segal said investing in crypto “doesn’t make sense right now”, causing concern among Silicon Valley buyers.

    China also announced plans to clean up virtual currency mining, according to CNBC.

    Previous moves by the country to crackdown on mining and trading of crypto has previously sent markets plunging.

    Meanwhile, US regulator the Securities and Exchange Commission , stopped a fund listing in November that would track the price of Bitcoin.

    If successfully listed, the fund would have enabled investors to enjoy any gains – or suffer falls – in the price of Bitcoin, without having to hold the cryptocurrency directly themselves.

    But the exchange traded fund was rejected by the SEC, which is sceptical about the cryptocurrency.

    Matthew Dibb, COO and co-founder of Stack Funds, told CoinDesk Bitcoin will likely fall further.

    He said: We have noticed some larger sales occur on Bitfinex as well as openings of new short positions.

    While liquidations so far are quite low by historical standard and funding rates are approaching flat, we could see a further cool-off in BTC for the short term as momentum is beginning to stall.

    Kunal Sawhney, chief executive officer of equities research firm Kalkine Group, told Yahoo Finance that a 5% to 10% correction was “quite normal,” given the surge in trading in the previous month.

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    What Is Crypto Market Cap And Why Does It Matter

    The market cap of a cryptocurrency is important because it is a convenient way to compare different cryptocurrencies. If currency A has a significantly higher market capitalization than currency B, it means that currency A is likely to be used more by individuals and businesses and valued more in the market.

    Stock resistance

    Read More About Cryptocurrencies From Cnbc Pro

    Parets noted that the coming days and weeks are expected to bring “choppy” price action. “A contraction and basing process is likely to take place after such a violent move and we want to treat sharp upward rallies suspiciously right now,” he said.

    Fairlead Strategies’ Katie Stockton said that long-term momentum is still moving upward despite the correction. She cautioned investors against reducing holdings of bitcoin or other correlated altcoins until a breakdown is confirmed which could mean waiting until Monday to reassess.

    “It is rarely a good idea to sell into an emotionally-charged downdraft like this given the possibility of a shakeout,” Stockton said. “A close above $48,000 tonight would be an incremental positive based on the current high-low range.”

    CNBC’s Ryan Browne contributed to this report.

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    With The Overall Crypto Market Sentiment Remaining Shaky We Might Be In For A Dismal Christmas This 2021

      As concerns of Evergrande collapse having a ripple effect on markets resurfaced, Bitcoin and Ethereum fell below $48,000 and $4,100 respectively in the past 12 hours. Following the two largest virtual tokens, the market cap of broader crypto market dipped by 4.2 per cent at $2.27 trillion, over the past 24 hours.

      Evergrande Group, Chinas developer, was downgraded to “restricted default” on Thursday by rating agency Fitch due to non-payment of offshore bond dues. According to Reuters report, failure by Evergrande to make $82.5 million in interest payments due last month would trigger cross-default on its roughly $19 billion of international bonds and put the developer at risk of becoming China’s biggest defaulter a possibility looming over the world’s second-largest economy for months.

      Apart from Evergrande, other factors such as uncertainty created due to new COVID-19 variant Omicron and fears of further Fed tapering leading to liquidity pull back have also contributed to the downturn in the crypto market. To give you an idea in the past 7 days Bitcoin prices, the largest and oldest cryptocurrency that determines the course of the broader market, is down by 15 per cent trading at $48,207. Similarly, Ethereum, the second-largest virtual token, is down by 9 per cent and is currently trading at $4,122.

      What If Youre Interested In Crypto But Havent Yet Invested


      Yangs set it and forget it approach to crypto reflects his philosophy for investing in the traditional stock market, but some experts feel cryptocurrency is too different from traditional investments to draw any historical comparisons. Thats why AShira Nelson of Savvy Girl Money is staying well away.

      Nelson primarily invests in low-cost index funds because I can see history on that, she says. The newness of cryptocurrency and lack of trackable data make her wary of these crazy swings.

      Potential investors looking to buy the dip should understand that fluctuations are par for the course, and be prepared for this kind of volatility going forward. Even if you invest now, with prices relatively low, be prepared for them to fall even more. Again, only put in what youre comfortable with losing after youve covered other financial priorities, like emergency savings and more traditional retirement funds.

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      Another Cause For The Crypto Crash: China Cracking Down On Illegal Mining

      The last time cryptocurrency values tanked so dramatically occurred when China’s central bank instituted a complete ban on crypto trading and mining.

      Now, China has announced that it plans to crack down on large-scale mining and state-owned entities involved in Bitcoin mining. The threat and speculation have contributed to a major market correction.

      Why Is The Cryptocurrency Market Down Today

        CRYPTOCURRENCY prices have plunged including major coins like Bitcoin, Ethereum, Solano, Cardano and Shiba Inu.

        The price of Bitcoin, the biggest cryptocurrency on the market, is now trading at $47,709.03 at the time of writing on Tuesday morning .

        The currency is down more than 2% in the past 24 hours and more than 7% in the past week, according to Coinmarketcap.

        The latest plunge follows a crypto crash at the start of December shortly after Bitcoin hit a record high of $69,000.

        Of 100 cryptocurrencies listed on Coinmarketcap, the price of 97 fell.

        Crypto markets were wiped by $1.5trillion after the December 4 crash, but the market has since recovered some of those losses.

        Today other big cryptocurrencies are down: Ethereum by nearly 4%, Binance Coin by over 4%, and Solano by 6%.

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        Afspa: A Law That Is Discriminatory Exclusionary Racist

        Another major reason is the United States Securities and Exchange Commission rejecting a spot bitcoin exchange-traded fund , which would likely have seen billions poured into the crypto market.

        The US Infrastructure Bill which has been signed by Joe Biden at an event at White House on Monday includes new crypto legislation which requires brokers to issue a 1099-B which will be notified to the IRS. In simpler words, the gains will now come to notice and there will be tax implications and hence the market is reacting.

        “The correction in Bitcoin and other cryptocurrencies could be due a mix of factors such as profit booking, China crackdown on cryptocurrencies and tax provision in the US infrastructure legislation,” says Kumar Gaurav, founder and CEO of Cashaa, a cryptocurrency platform.

        “Whether it is Bitcoin or any other cryptocurrency, its important that the investor understands the underlying project it represents and takes an investment decision accordingly, says Gaurav.

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