Monday, August 15, 2022

Why The Crypto Market Is Down

Why Does Crypto Go Up And Down

Crypto crash – Why the crypto market is going down (and how to profit)

Cryptocurrencies are assets, and, as with any asset, the price of a cryptocurrency is subject to changes. Since cryptocurrencies don’t have a governing body that can dictate their price directly, the price of a particular cryptocurrency is determined by the balance of supply and demand in the market. The exception is stablecoins, whose prices are pegged to fiat currencies and fluctuate with them.

Critical Crypto Spot Trade: Why Crypto Market Is Down In 2022

So why crypto market is down ?

The crypto markets have been on a downtrend for a large part of this year. Many crypto experts have claimed that this downtrend is the start of the bear market.

This drop in value has also led to a dip in trading volume in the spot markets. One can observe the steady decline of crypto spot markets over the past year based on trading volume data for digital assets.

At the peak of the previous bull run, trading volumes in the crypto spot market hit $3.8 trillion in April 2021. However, there was a drop in volume, and trading volumes hit $2.5 trillion in September 2021. Currently, the trading volume in the crypto spot markets ranks between $1.26 and $1.62 trillion.

This drop in value has also affected crypto exchanges that offer traders and investors access to the spot markets. For example, in September 2021, the Binance exchange recorded about $828 million in traded volume on its spot markets. As of March 2022, this exchange could only handle $490 billion of spot trades.

Similarly, crypto exchanges like OKEx and Huobi Global handled $181 billion and $168 billion in spot trade during September 2021. As of March 2022, both exchanges could only take $75.9 billion and $65 billion in spot trades.

For many new to this space, the downtrend in the crypto markets is primarily caused by the dip in the price value of most cryptocurrencies, starting with the leading digital asset, Bitcoin.

Is There A Way To Learn About Crypto Without Investing In The Currencies Themselves

Buying tokens is the most straightforward approach to experimenting with cryptocurrencies. But other opportunities exist for exploring the crypto world while potentially protecting your money from seesawing swings.

Here are a handful of alternatives:

Buy shares of crypto companies. Many companies in the crypto space are publicly traded. Buying shares of Coinbase Global or PayPal Holdings rather than of the coin itself allows you to benefit from the business proceeds of these companies, which are in part generated by crypto. You can also buy shares of companies that make crypto-related hardware, such as Nvidia and AMD.

Invest in crypto ETFs or derivatives.Specialized exchange-traded funds, or ETFs, are available for crypto. ETFs are baskets of securities, such as stocks, commodities and bonds, that follow an index or sector, in this case, crypto. Futures and options are also available for some crypto products, though these advanced types of investment vehicles come with their risks.

Get a job in crypto.LinkedIn, Indeed and Monster list thousands of jobs in crypto. Whether you’ve got a traditional finance background or you’re a software engineer, there’s a boom in the blockchain labor market. There’s also Cryptocurrency Jobs, a job board dedicated to blockchain careers.

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What Is A Cryptocurrency

A cryptocurrency is a type of digital currency based on a decentralised payment system that operates in a fully automatic mode. Cryptocurrency transactions are recorded on the blockchain. Cryptocurrencies are protected by cryptographic methods that make them extremely difficult and costly to hack.

The lack of any internal or external administrator for cryptocurrencies leads to the fact that banks, tax, judicial and other authorities or institutions cannot influence the transactions of any participants in the payment system. Cryptocurrency transactions are carried out directly without the approval and control of a third party and are irreversible. As such, no one can cancel or block a transaction or make a transaction without a private key.

Most cryptocurrencies provide pseudonymity, i.e., all transactions between all addresses are publicly available, but there is no information about the owners of the addresses.

I was very excited about a currency that was not controlled by a central government, that could be a free market currency. That was all the incentive I needed to dedicate my life to it. Erik Voorhees, Founder and CEO of ShapeShift.

Three Reasons Behind The Crypto Market Crash

Why Is Crypto Crashing? These Stats Show How Much the Market Has Gone Down
  • Total market cap has tanked to a ten-month low of $1.6 trillion.

  • Fed interest rate hikes are driving investors back to traditional assets.

  • Institutions are also cooling on crypto following an epic 2021.

Total crypto market capitalization has fallen to its lowest level in ten months. A further $130 billion has left the space over the weekend resulting in a market cap slump to $1.62 trillion. It has not been this low since early August, according to CoinGecko.

Bitcoin and Ethereum lead losses again during the Monday morning Asian trading session. Bitcoin has shed a further 3.1% to $33,486 at the time of writing, and Ethereum is down 4.2% to $2,443, its lowest price since January.

Crypto markets are cyclical, but there are a couple of other factors driving the selloff at the moment.

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Why Does The Market Make Cryptos Go Up And Down Together

This phenomenon exists in the crypto market and more traditional markets and is called market correlation. There are certain patterns according to which various assets prices move in relation to each other. Since the crypto market is still quite young, and the of the entire cryptocurrency market is generally small compared to traditional markets, there is one main asset that affects the prices of all other cryptocurrencies. This asset is Bitcoin. Therefore, prominent bullish or bearish sentiment in the Bitcoin market affects both Bitcoin and the entire crypto market.

Why Is Crypto Crashing These Stats Show How Much The Market Has Gone Down

The cryptocurrency market is still reeling from this week’s sell off with nearly all major coins in the red in the early hours of Thursday.

At around midnight UTC+1 Wednesday the total cryptocurrency market capitalization was just over $2 trillion. At its lowest point that afternoon, it had fallen to around $1.44 trillion, according to CoinMarketCap dataa decline of nearly 30 percent.

Muyao Shen, a markets reporter for CoinDesk, called the market downturn the biggest sell-off since March 2020.

Bitcoin, the world’s foremost cryptocurrency, has tumbled and hit its lowest price in three months this week, at one point threatening to drop below the $30,000 mark.

Its price has since rebounded to just under $40,000 at the time of writing, but it still represents a sharp drop from around $50,000 this time last week. The graph below from Statista shows the token’s price through May, using CoinDesk data.

Bitcoin is not the only coin affected. Ethereum, the second highest-valued coin, has fallen over 30 percent over the past seven days and over nine percent in the past 24 hours.

Meme tokens such as Dogecoin and Shiba Inu, which had enjoyed recent popularity, have also not escaped. Dogecoin hit a high of $0.68 over the past seven days but crashed to a low of $0.21. It is currently priced around $0.36, down around 12 percent on the day.

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What Next For Bitcoin

Trade analysts say that Bitcoin is continuing to move within a descending triangle pattern. It may witness an immediate support at $26,800. The next resistance for Bitcoin could be $40,000.

Bitcoin corrected by nearly 6% yesterday dropping below the $30K level once again. BTC had made minor recovery in the last couple of days rallying above $32K but the momentum did not last long as the Dollar index regained some lost ground. The daily trend for Bitcoin continues to traverse within a descending triangle pattern, analysts at WazirX Trade Desk shared in a note via email.

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The next resistance for BTC is expected at $40,000 and an immediate support is expected at $26,800. Bitcoin needs to break past the $40K level to witness any significant upward rally. Until then BTC may continue to consolidate between the $28K to $40K, they added.

Churning Of Funds In Different Assets


Some experts believe that the recent fall in Crypto indicates that investors are willing to look for different opportunities by booking profit in the digital assets. While cryptocurrency has lost significantly, some metaverse tokens such as Sin City and Verasity have witnessed sharp growth.

This could be seen as the investors sentiment of redistributing their assets across different opportunities like altcoins and NFTs.

Also Check: What Is Cryptocurrency Used For

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%.

    Will Bitcoin Go Up If The Stock Market Crashes

    Not necessarily. Supporters of bitcoin see it as a diversifier in balanced portfolios, but it did no better than stocks at the start of the coronavirus pandemic. This is because investors panic-sold everything.

    In the first two weeks of March 2020, bitcoin went down over 40%.

    That was when we saw all equity markets take an aggressive leg down because of concerns about Covid-19, notes Rosie Bullard, partner and portfolio manager at James Hambro & Partners.

    So it wasnt exactly a store of value in an equity market reversal.

    If you look back to March of last year when we saw the market collapse, you didnt see bitcoin suddenly rally in that period.

    Rosie Bullard, partner and portfolio manager at James Hambro & Partners

    That said, how crypto assets perform during stock market falls will depend on why financial markets have collapsed.

    If it were an inflationary shock, such as we saw in 1974, most bitcoin investors believe it would provide protection.

    If you want to read more about the alternatives to bitcoin, check out are article here.

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    Why Are Crypto Prices Declining

    One of the key reasons driving the crypto price decline is the recent incident involving Chinese companies Evergrande and Kaisa. These companies failed to make their scheduled US dollar bond payments, which have been affecting the prices of cryptocurrencies over fears of a financial crisis.

    Other factors also include uncertainty created by the Covid-19 Omicron variant hitting the global price economy. While many in the cryptocurrency space see their investments as separate from the traditional stock market, large events such as these still can impact their prices.

    It also appears that the regulatory concerns regarding cryptocurrencies in the US and abroad have also been influencing the prices of cryptocurrencies, prompting the prices to take a deep plunge. Critical concerns such as Fed tapering are also driving the prices of crypto to shrink on global finance indexes.

    Of course, if you use Coinbase or CoinMarketCap, you may have seen some pretty odd prices over the last day. This was due to a glitch in their price tracking. The platforms have since fixed the issues, but for a while, some price graphs looked like this…

    What Exactly Has Happened To Crypto

    Why is crypto down today? Cryptocurrency market crash

    The headliner cryptocurrency Bitcoin fell on Wednesday, dropping to about $30,000 at one point for a pullback of more than 30% and continuing a week of selling in the crypto space. Ether , the main Ethereum blockchain coin, was also dramatically down and broke below $2,000 at one point, a more than 40% drop in less than 24 hours. It whipped out about $100 billion from the combined crypto market in minutes and called into question the crypto market once again.

    Other top cryptocurrencies such as XRP, luna, solana, cardano, and avalanche are also struggling with market sentiment decreasing to the floor price not seen since January.

    Bitcoin and the crypto crash have caused a dramatic fall in market sentiment, as the Bitcoin Fear and Green Index, which collects data from social media posts, surveys, volatility, and trading volume, showed. Stock markets have also experienced this drop. The Nasdaq was reporting its longest weekly losing streak since 2012. According to The Washington Post, The Nasdaq continued to have the losses as investors are leaving high-flying tech stocks, shedding 3.3% in morning trading on Monday.

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    I Thought Crypto Was A Hedge Against Inflation

    Some cryptocurrencies, particularly market giant bitcoin, were touted as assets whose value would hold over time, which means they would be a good hedge against inflation.

    But as inflation has surged, bitcoins price more than halved, making it less attractive for investors during high spells of elevated prices.

    Caleb Franzen, senior market analyst at Cubic Analytics, a big data analytics firm, said he thinks bitcoin will continue to act as an inflationary hedge over a longer period of time. Some modeling projects that bitcoins value may drop to a range of $19,000 to $21,000 in the short term, he said, but in the longer span of five to ten years, it may prove to be a good hedge.

    New Riders Of The Crypto Hype Train Are Getting Hammered By Falling Bitcoin And Ethereum

    Cryptocurrency, a type of money that is completely virtual, has tumbled in value

    The cryptocurrency market has shed two-thirds of its value in seven months, compunded by a brutal bout of selling on Monday.

    According to data site CoinMarketCap, the overall market reached as low as $892bn yesterday, a large drop from its peak of $2.9trn in November last year.

    The largest and most well-known cryptocurrency, bitcoin, fell to an 18-month low of $23,750, and was down by 50% so far this year.

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    Whats Behind The Latest Bitcoin Drop

    Many investors see Bitcoins price swings as part of the game, but volatility is tough for individual investors to deal with, Noble says. Like Yang, he warns against selling too fast.

    Recent price fluctuation has followed new uncertainty over the countrys lingering fight with COVID-19, new regulatory actions by the U.S. government, as well as the new legislation pertaining to crypto in the infrastructure bill. In an industry as new and unproven as cryptocurrency, it doesnt take much to drive big swings in price. More generally, new short-term investors who are selling their holdings in reaction to the latest drop may be contributing to the drop in Bitcoins value, according to a report from Glassnode Insights, a blockchain analysis firm.

    While fluctuations are expected, Noble says hes been surprised by drops earlier this year. I thought the market was maturing and these things would be less frequent and severe. Boy was I wrong, he says.

    Some of this years drops have been caused by a combination of factors, Noble theorizes, from excitement about low-quality coins, to negative remarks from Elon Musk, to Chinas recent crackdown on crypto services. This mix of factors has potential to make sell-offs all the more violent, says Noble.

    He likens the drop to the stock market crash of 1987, from which the markets took months to recover. But because crypto moves a lot faster today than equities did in the 1980s, Noble says we may see a quicker recovery.

    Why Inflation Not The Crypto Crash Will Define Bitcoin

    Bitcoin News Today | Why Crypto Market is Going Down

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      Crypto is down. Badly. Bitcoin is at its lowest price in 18 months and the resulting headlines are dramatic. And yet, in the face of the crypto crash, not all hope is lost. Despite Bitcoins falling value, it remains to be seen just how the wider economic landscape impacts the coins long-term adoption.

      Why? Because Bitcoin use cases are actually growing under the backdrop of global inflation. Beyond valuation, Bitcoin is finding new utility in this moment of market madness. Cryptos biggest and oldest coin is showing promise on several fronts from governments exploring it in international trade to investors searching for a digital store of value. Lets look at why inflation and not the crypto market crash will define Bitcoin for the years to come.

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      Bitcoin In International Trade And Settlement

      Speed, efficiency, risk: there are multiple reasons why cross-border digital payment is also being explored during these times of high inflation. For example, The Bank for International Settlements recently developed prototypes for a common digital currencies platform. Codenamed Project Dunbar, the development proves that financial institutions could use central bank digital currencies to transact directly with one another on a shared platform. The issue for banks, however, is that realizing such a project remains years away.

      Earlier this year, The World Economic Forum outlined the benefits of digital currencies in global trade. They include speed bringing the payment settlement time from days to minutes as well as alternative credit using a public blockchain ledger to share financial history and underwrite loans for import and export. Since it is by far the most popular cryptocurrency, Bitcoin is well-positioned to spearhead the introduction of digital monies into the financial ecosystem.

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