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The cryptocurrency market has faced a bloodbath over the past few days. Bitcoin, the most famous in the world Cryptocurrency It dropped near $25,000 on a daily basis, well below its all-time high of $69,000. Other altcoins also suffered a drop and brought the global cryptocurrency market cap down to $1.12 trillion. Major cryptocurrencies like Ethereum, Solana and Cardano are down double, with the market bearing the brunt of it. But what caused such a sharp decline in Cryptocurrency market?
The reasons for this are manifold. Starting in 2022, cryptocurrencies, some of which had risen to all-time highs in previous years, started trading in the red and have since rallied lower. At the beginning of the year, the decline was mainly attributed to a new wave of the epidemic, and when things began to stabilize, developments in the global economic scenario were caused by geopolitical tensions and inflation.
“The significant decline that we are seeing in cryptocurrencies is a global phenomenon. It can be attributed mainly to developments in the macro environment such as increased inflation, interest rate hikes by the Federal Reserve, the war between Russia and Ukraine, etc. It is also interesting to note that the markets Cryptocurrencies are reversing traditional financial markets as both see a correction.Nishal Shetty, co-founder and CEO of WazirX, said it indicates that cryptocurrency markets are reaching maturity — just like other markets, digital currencies also have a downward and upward trend, and in At the moment, we are in a bearish phase.
The Crypto Fear And Greed Index was in “extreme fear” territory, indicating that investors were very anxious and were selling their holdings to cut losses. Stimulating the bearish sentiment was the Federal Reserve’s announcement that interest rates would rise by half a percentage point. Darshan Bateja, CEO and co-founder of Fold, said that market participants are beginning to panic about inflation and a possible recession, which is dragging down the stock and cryptocurrency markets.
Bitcoin is feeling the heat
Bitcoin prices, which touched an all-time high in 2021, fell near $25,000 on Thursday, after a steady decline over the past week. The world’s most popular cryptocurrency lost 30 percent of its daily value on the day as market participants panicked due to various issues.
“Although Bitcoin dropped to levels close to $25,000 yesterday, it settled near the $29,000 level in the final hours of the US trading sessions. With BTC, most altcoins have also recorded sharp declines,” said Bateja.
“The data showed that the exchange rate of BTC has remained relatively high in the past couple of days. Investors often transfer their holdings to exchanges when they intend to sell.”
Luna is moving away from the top ten list
At the time of writing this article, Luna is ranked 230th in the cryptocurrency index according to CoinMarketCap, with a value of $0.0003872, down 99.99 percent from its constant value of $88. Extreme volatility brought the Terra blockchain to a halt. “The Terra blockchain is officially discontinued at block 7607789,” Terra said on Twitter on Thursday.
“Terra (LUNA) experienced a week-long hiccup with the coin dropping at an alarming rate. The catastrophe began when the algorithm-based stablecoin TerraUSD (UST) sank to nearly $0.6. However, one of the world’s largest cryptocurrency exchanges was shut down by Binance. , temporarily withdrew UST and LUNA.All this led to a cascading effect on LUNA prices, causing them to get out of hand.WazirX Trade Desk said: “The daily chart of LUNA has broken below the ascending channel pattern.”
Adding to the current market woes is the UST hard decoupling. As the decoupling intensifies, the price of the LUNA device has fallen to $0.009598. As a result of this sharp price drop and high inflation, the team behind LUNA, Terraform Labs, decided to shut down and restart the blockchain for a while. Shortly after the correction was implemented, Batija said this was done to “prevent the referee’s attacks.”
Should you buy a dip?
Crypto market experts mostly see dip buying, as they are still hoping for the market to bounce back.
Investors should take advantage of this drop and start looking for opportunities in the market. It is a good moment to invest. This is not the first time that the cryptocurrency market suffers huge losses, then recovers and becomes stronger than before. “The same thing will happen this time,” said Kumar Gaurav, Founder and CEO of Cashaa.
In light of the high downside in the market coupled with high volatility, retail investors either try to cut losses or try to buy on the dip. Choosing the right exchange to store your assets can make a big difference during volatility. While buying cryptocurrencies and holding them until the price goes up is a great investment strategy, you can also earn passive income from your cryptocurrencies until you decide to sell them,” advised Bateja.
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