Many investors are getting pessimistic today, because crypto prices are unstable and crashing all the time. Some crypto investors might decide to sell all their crypto assets, cut their losses, and avoid investing in cryptocurrencies for the time being. However, with the crypto crashes and the instability in the crypto market today, many new investors also take this opportunity to buy as much cryptocurrencies as they can, hoping to earn big profits later.
Why is crypto crashing? Should you feel worried about it? This guide will give you some useful information about various factors that can contribute to the crypto price crash.
The Crash of Cryptocurrencies in the Market
Today’s crash of cryptocurrencies makes many crypto investors feel worried, as Bitcoin and other cryptocurrencies in the market are falling down in price so fast. As of June 15th, 2022, Bitcoin is going down in price to around 21,500 USD per 1 BTC, which is worse than the price of Bitcoin at the start of the month. At the start of June 2022, Bitcoin’s price was quite stable at around 30,000 USD per 1 BTC, while today, we can see the price of Bitcoin is getting worse than it was before. Mind you, the 30,000 USD per 1 BTC price at the start of June 2022 was already the crashing price for Bitcoin, so today we are seeing the Bitcoin crash getting even worse than expected.
Not only Bitcoin, Ethereum is also experiencing a price crash this month, starting from around 1,950 USD per 1 ETH at the start of June 2022 to around 1,190 USD per 1 ETH as of June 15th, 2022. Will the crash keep on happening in the crypto market? Here are some factors that can contribute to the crypto price crash:
Factor #1 – Unexpected Incidents in the Crypto Market
Crypto crashes can happen when there are unexpected incidents in the crypto market. Nobody can predict these incidents, and when it happened, it caused a big trouble in the crypto market. There were some unexpected incidents in the crypto market in May 2022, where the stablecoin USDT (Terra USD) fell down in price to around 95 cents per 1 USDT. Following this incident, Terra LUNA, its sister token, fell down to zero.
These are the incidents that prompted the price of Bitcoin and other cryptocurrencies to go down and crash. Bitcoin fell down in price from around 47,000 USD per 1 BTC in April 2022 to around 30,000 USD per 1 BTC in May 2022. In June 2022, Bitcoin and other cryptocurrency prices crashed further because of another factor, which is the inflation in the United States.
Factor #2 – Inflation
Another factor that will affect the prices in the cryptocurrency market is inflation, and depending on the inflation situation, it can worsen the price of the crypto assets further. Today, the United States is facing the worst inflation problem for this year, and it affected the prices of Bitcoin and the other cryptocurrencies in the market. Bitcoin has been trying to stabilize its price after the crash in May 2022, and now it got hit by another crash because of the inflation problem in the United States.
Inflation happens because of various reasons, such as the rising interest rates, problems in the supply chains, rising demands from consumers, and so on. The United States is facing a big inflation problem today, and it affected the value of various cryptocurrencies in the market. Bitcoin has been going down lower than expected, to around 21,500 USD per 1 BTC as of June 15th, 2022. This might get worse depending on whether the other factors causing the cryptocurrencies to crash exist.
Factor #3 – Mass Crypto Withdrawals by the Crypto Investors
The value of cryptocurrencies is getting higher because many people keep on investing in them. They keep trading and using the cryptocurrencies to keep them in circulation. However, cryptocurrencies will lose their value fast when the investors are withdrawing their crypto assets in mass withdrawals. This will cause the crash in various cryptocurrencies, which can lead to further problems if we don’t see any price recovery soon.
By looking at the Bitcoin crash incidents, along with other cryptocurrency crashes, investors are thinking twice before putting their money on any cryptocurrency. The crypto crash itself has cost many investors millions of dollars in investment loss, and many of them need to cut their losses, worrying that the prices of crypto assets will go down even further. Thus, the mass withdrawals happened, causing the crypto market to become even more unstable.
Factor #4 – Changes in Crypto Regulations around the World
One of the most important factors that can cause the crypto market prices to fall down is the changes in crypto regulations around the world. Crypto investors come from all around the world. Yes, some countries in the world ban cryptocurrency investment. But, most of the countries in the world allow their citizens to put their investments in cryptocurrencies with no issues.
However, some countries will have certain regulations that will control their citizens in their cryptocurrency trading, investing, mining, and many other crypto-related activities. Changes in the crypto regulations around the world can have the potential to crash the cryptocurrency prices in the market. For instance, some countries might pass new regulations to ban all forms of crypto mining activities. These new regulations will affect the crypto market, as there will be fewer crypto miners available to produce new cryptocurrencies and help with the crypto transaction validation process. It can affect the value of the crypto assets in the market and cause various cryptocurrency crashes.
You have learned about the reasons cryptocurrency is crashing today. There are various factors that can cause the cryptocurrency prices to fall down. It will take some time for the crypto market to adapt to the current financial situation, and you will need to wait until the cryptocurrency prices are going up again.
Meanwhile, with the cryptocurrency prices getting lower, it’s the best time for you to invest in various cryptocurrencies. It will give you bigger potential profits, which you can cash out later when the crypto prices are going up again and reach their new peaks. Good luck!