The entire crypto market has been facing a crashing situation these days. Each day is like a limbo game for the market to visualize how low it can reach day after day. As the lowest plunge has been recorded within this 18-month, it is estimated to have the lowest value. If we wonder what led to the crypto crash and what were the biggest factors that culminated in the perfect storm of recent months.
The two biggest cryptocurrencies in the market are Bitcoin and Ethereum. These two cryptocurrencies are also facing a drop in their value which is around 60% to below $20,000 in value and 25% to just about $1,000 in value, respectively. The crypto market as a whole has fallen to a $1 trillion market value by $20 billion. Almost every single crypto token on the market is visualizing these downward-pointing red arrows.
Here in this article, we have mentioned the main reasons behind the crypto crash.
The Luna-Terra Crash
The Terra-Luna crash is not facing an astronomical level of destruction by itself, though it shook crypto investors to the core. The rippling paranoia is a result of a stablecoin falling situation, which as a result, reduced the huge list of investors; along with this, this has wiped off the entire saving of life. This may have sent fear-driven cracks in the hearts of the crypto market as a whole.
The Stock Market
The long-term crypto investor must be aware of the fact that it is always worth keeping an eye on the equity and stock market if you have a desire to make an investment because the crypto and equity markets are linked altogether. When the stock market dips, it will directly impact the cryptocurrencies as well.
It has been a tough year for the S&P 500, as tech giants including Amazon, Tesla, and Apple fell by 6%, and the Russian-Ukrainian conflict fueled an unstable fire. And the crypto market followed a similar general pattern.
The Increase in Interest Rates
The US Federal Reserve has agreed to raise interest rates to make an initiative to curb inflation. As per the Wall Street Journal report, the Fed will employ an aggressive plan to raise the cost of debt, reduce spending, and control record-high inflation. This aggressive increase in the interest rate is commonly regarded as a leading recession predictor.
Regulatory Hurdles
The government has been working to regulate cryptocurrencies; they have been closely watching the global crypto market as it is experiencing wild ups, downs, dips, and surges over the globe.
Celsius Network
Decentralized finance company Celsius Network mentioned that the extreme current market situation is blocking all cryptocurrency transactions. All the cryptos are facing a downfall in their value during the massive sell-off that followed the closure.
Celsius Network was taking a step ahead to take this crucial decision to stabilize liquidity and operations as a motive to preserve and protect assets. They are also liable enough to keep up with their commitment made to their consumers; Celsius would continue to give users rewards and incentives throughout the break.
As is often the case when big things topple and crash, it is often not a single factor but a slew of circumstances, triggers, and occurrences within a wider world that brings everything to an end.
