Crypto market crash: Bitcoin below $18,000. Why is crypto tumbling?

The recent sell-off in the crypto market indicates the nervousness of the investors amid increasing inflation fears and a pause on the withdrawal by crypto lending service Celsius. Moreover, as the global situation remains uncertain, investors are apparently keeping themselves away from riskier assets. Crypto is considered as one of the most volatile instruments for investment purpose.\
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Crypto market crash

New Delhi: For the past few months, each day has been nothing less than a nightmare for the investors in cryptocurrency as it has been reaching new lows each day and that too after reaching an all-time high late last year.
The most popular crypto token Bitcoin has lost over two-thirds of its value since it hit a peak of around $69,000 in November last year and is currently trading at below the $18,000 mark. Similarly, another token Ethereum has lost almost 80 per cent from its peak.
This great crypto crash has made the overall market capitalisation of cryptocurrencies drop under $1 trillion for the first time since January 2021.
But why is this happening?
The recent sell-off in the crypto market indicates the nervousness of the investors amid increasing inflation fears and a pause on the withdrawal by crypto lending service Celsius. Moreover, as the global situation remains uncertain, investors are apparently keeping themselves away from riskier assets. Crypto is considered as one of the most volatile instruments for investment purpose.
Luna-Terra crash
Anyone keeping track of the happenings in the crypto world must have heard of the Luna-Terra crash. The tragic event cost the entire life savings of many investors. Terra coin is a stablecoin which had a market capitalisation of over $18 billion before the crash.
Stablecoins are cryptocurrencies the value of which is tied to that of another currency, commodity or financial instrument. These are aimed at offering an alternative to the high volatility of the most popular cryptocurrencies. So, with stablecoin Luna losing 99.9 per cent of its value, Terraform Labs (the company behind Terra) laid out a plan to sell their entire Bitcoin reserves to bring back the peg to $1, which resulted in failure. This erased over $40 billion out of the crypto market.
Celsius Network pause on crypto transactions
Cryptocurrency lending firm Celsius Network on Sunday announced that it is freezing all the crypto transactions citing “extreme market conditions.” Following this a massive sell-off was witnessed in the crypto market. “We are taking this necessary action … to stabilize liquidity and operations while we take steps to preserve and protect assets,” the company had said in a blog post.
Interest rate hike
In a bid to fight the rising inflation, the US Federal Reserve decided to increase the rate of interest. Following the news of a rate hike, the stock market along with the crypto market witnessed a huge downfall.
Equity market
While there may not seem a direct connection with the equity market, the crypto market is affected by the happenings in the former. If a downtrend is witnessed in the stock market, the same is observed in the crypto-sphere as well. A New York Times report highlighted that Bitcoin’s price movements closely mirrored that of Nasdaq.
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