The global crypto market has experienced a months-long drop, and in recent days investors are witnessing an acceleration of the decline. Top cryptocurrency prices have been crashing since November 2021. In the last few days, there has also been a growing concern among investors, triggering a global sell-off of riskier investments.
Looking at the top crypto assets, the world’s largest crypto coin, Bitcoin has dropped by 50% from its record-peak price of about $69,000 in 2021. Other major coins like Ether and Solana have plummeted, causing many investors to sell-off.
Why is the Crypto Market Crashing?
In the last 24 hours, according to CoinMarketCap data, the global crypto market has decreased by about 7.94%, shrinking to $1.41trillion. But how bad is it, and why is the market experiencing this crypto crash? Here are major reasons cited by investors and experts.
Wide Sell-Off and Extreme Fear of Losses
According to market experts, the decline in crypto prices results from a broad sell-off amidst growing and extreme fears among investors. Many are rushing to reduce their risk exposure, citing uncertain macro conditions across the crypto market.
Inflation and Fear of a Potential Recession
In the last 24 hours, almost all the significant cryptocurrency asset prices have declined. Several investors are treating them as risk-on-assets, particularly the Bitcoin. Experts say the extreme fear is caused by a panic over inflation which may cause another major recession.
Generally, the crypto market has a strong correlation to the equity markets. With such fears, investors are now taking a risk-off approach, with many selling their crypto assets and stocks as a risk management measure.
Global Financial Markets Uncertainties
The rising inflation is adversely affecting the global financial markets. The Russia-Ukraine war also accelerated it and the increasing tension in Sri Lanka’s situation. These situations significantly impact the global financial markets, adding more pressure and uncertainty to the crypto market. The tense situations have led to a large sell-off, which is why the world is witnessing a growing crypto crash.
Negative Market Sentiment
Global financial market experts indicate the panic over inflation, potential recession, Russia-Ukraine tension, and other market uncertainties have caused a negative market sentiment among investors. This is not only in crypto markets but also in the bond and equity markets.
With such growing negativity and the Greed and Fear Index greatly indicating fear among investors, the crypto market may crash further as more continue to sell.
Impact of the Ongoing Crypto Crash on Prices
As top cryptocurrencies continue experiencing and racking up significant losses in the last few days, experts warn that this could be long-term. Inflation is the leading cause of the broad sell-off. The attempt to combat inflation and ebbing liquidity by tightening monetary policies has pushed investors away from these speculative assets. A closer look at the recent prices of top crypto assets below will give more details on its impact.
While it remains the largest crypto asset, its price has decreased by 13.64% in the last seven days. The broad sell-off in Bitcoin has caused its price to drop below $31,000. This equates to a decrease in the price of about 8.26% in the last 24 hours. It also marks the asset’s first decline to this level since July 2021, shedding 50% of its peak gain last November, as earlier stated.
ETH, which is ranked, has the second-largest crypto asset by market capitalization after BTC dropped by 18.63% in the last seven days. While in the previous 24 hours, the price has declined by 5.9%, bringing it to $2319.
XRP, the 6th largest crypto asset, declined in the last seven days by 9.40%. The asset has also dropped to $0.5656, about 0.55% in the previous 24 hours.
Ranked as the 8th largest by market capitalization, this asset has decreased by 10.53% in the past one week and 4.21% in the last 24 hours, bringing the price down to $0.7069.
BNB, from one of the world’s largest crypto exchanges, Binance, declined to $347, a 3.41% drop in the last 24 hours. While in the previous seven days, this 4th largest crypto asset shrunk by 11.05%.
Solana is currently trading at $74.91 after a 13.41% drop in the last 24 hours. This 7th largest asset, SOL, has also recorded a 16.73% decrease over the past seven days.
Dogecoin (DOGE) and Shiba Inu (SHIB)
These two popular meme coins, DOGE and SHIB, have shed 11.64% and 17.07%, respectively, over the past 24 hours. SHIB, ranked 16th by market capitalization, is currently trading at $0.00001505, while DOGE, the 11th largest crypto asset, is trading at $0.1084.
As the world continues to witness the unfolding crypto crash, experts indicate the flows are now in the negative range with dwindling supply. Also, many BTC miners are increasingly selling off the asset. The overall negative market sentiment may still drive the prices down, especially Bitcoin, to below $30,000.
While this is the current situation, some investors think this could also be a good buying opportunity, mainly for long-term investors. However, to make the right decision, an investor should take time and do thorough market research while consulting with experienced market experts.
To learn more about the potential risks and the unfolding crypto crash, investors should consult a qualified and experienced financial advisor. This will help many to make informed investment decisions and avoid losses.