In the last two months, crypto markets have seen huge corrections. The worldwide cryptocurrency market valuation has dropped to $950 billion today, down from a high of $3 trillion in November 2021. Weak global cues, along with rising inflation and interest rates, have resulted in a major sell-off in cryptocurrency markets. Investors and dealers are now speculating on whether the cryptocurrency markets will recover this year. Experts in the crypto business have differing opinions on the subject.
The first half of 2022 has been awful for crypto, but few days have been as bad for the business that has grown up around digital currencies. Trading platforms froze withdrawals on 13th June, companies laid-off workers, and skeptical investors sold their crypto assets, bringing cryptocurrency’s market cap below US$ 1 trillion, down from US$ 3 trillion in November last year.
Bitcoin has dropped below $23,000, a new 18-month low. The price of Bitcoin had declined by 11.2 percent in the last 24 hours to US$ 22,514.75 per token yesterday. Ethereum, the second most valuable cryptocurrency, had lost 10% of its value.
While some analysts anticipate that the cryptocurrency markets will recover or the Crypto crash recover in the next months, others feel that investor skepticism will remain in the near term. Let’s see the reasons behind the Market fall.
What triggered the crypto crash?
The immediate cause of the crypto meltdown appears to be a big sell-off due to recession fears and a halt in withdrawals by cryptocurrency lending firm Celsius. Celsius Network stunned the market early Monday when it announced that it had halted all withdrawals, swaps, and account transfers due to market conditions.
The platform also stated to the Celsius Community that the decision was made to stabilise liquidity and operations. Investors are also continuing to maintain a distance from risky assets. The significant decrease in the price of virtual currencies indicates that investors’ risk appetite is low, and they’re wary about high-risk investments.
According to Rajagopal Menon, Vice President of crypto exchange WazirX, worldwide inflation has been a big source of anxiety for investors (crypto crash). It is at a 40-year high of 8.6% in the United States and 9% in the United Kingdom.
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Locking crypto assets worth billions of dollars under Celsius’ management has raised questions about the platform’s viability. The news sent shockwaves through the crypto world, bringing to mind what happened in May when a stablecoin project lost billions of dollars in value, taking the rest of the industry down with it. Given the current market condition, one of the most commonly asked topics is: Is the crypto market doomed, or will cryptocurrencies make a comeback?
Will Crypto Comeback
The global cryptocurrency market has plummeted in the past few months, with several prominent crypto prices hitting new lows in 2022. During the current slump, the price of one of the most popular cryptos has dropped to virtually nothing.
Despite the enormous drop, this is most likely not the worst situation the crypto community has ever faced. Some analysts predict that when the globe rebounds from the global economic collapse, cryptocurrencies will recover as well.
Dileep Seinberg, founder and CEO, MuffinPay, a bill payment, and utility token said:
I strongly think crypto will rise again. By August 2022, the bloodbath and crypto winter should be over. By December end or January 2023, Bitcoin may rise to an all-time high of $70,000
The Fed faces a difficult balancing act in lowering inflation without risking stagflation. If the Fed keeps raising interest rates, a recession will loom, sending stock and cryptocurrency markets into a spin. The cryptocurrency markets will remain volatile, and investor skepticism will persist.
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