Why is the price of cryptocurrency dropping? What should you do?
The current year, 2022, has not been much profitable for the cryptocurrency world, and on the contrary, the world of digital tokens has seen more crashes than gains. Months after the Covid-19 wave and the ongoing global war Cryptocurrency The market appears to be losing steam, dropping below the $1 trillion mark after January of last year. Cryptocurrency investors They were less willing to take risks and their fear levels exceeded expectations.
BitcoinThe world’s largest cryptocurrency gave up most of its gains to reach an 18-month low by hitting $22,000 levels on Tuesday, June 4. Bitcoin is down more than 25 percent in the past week. On the other hand, Ethereum, the world’s second most popular cryptocurrency, fell more than 33 percent in the past week to hover at the $1,100 mark.
why him Cryptocurrency Market escalation?
The cryptocurrency market largely mirrors global stock markets, and the sell-off in traditional markets on Friday, June 10th led to a contagion effect as cryptocurrencies began to drop rapidly. “Increasing expectations of more aggressive Fed rate hikes to fight inflation have evaporated investors’ appetite for risk across the board, with many indicators officially entering a bear market,” the CoinDCX research team said. Market sentiment fell to a new fear level of 8, the lowest in nearly two years.
“Cryptocurrency markets have seen a correction due to weak global signals. Internationally, the stock and cryptocurrency markets have become highly correlated. The global inflation rate has also been a major concern for investors. In the US, it hit a 40-year high of 8.6%. and in the UK at 9%; higher interest rates across major crypto countries are also a growing concern as they reduce liquidity. Both indicators led to heavy selling,” Rajagopal Menon, Vice President of WazirX, told News18.com.
Continued selling will depend on the Fed rate review announcement. Most investors will be looking at the FOMC meeting scheduled for June 14-15 with interest. The rate increase has already been priced in by the Federal Reserve; However, most investors are concerned that unless inflation numbers begin to decline soon, the Fed will likely have to tighten covenants at a faster pace than expected,” noted Darshan Bateja, CEO and co-founder of Fuld.
What’s Next for Cryptocurrency Investors
Experts said that the cryptocurrency has entered bear markets for the time being, but they remain hopeful for an eventual price hike. “Such corrections we have seen in the past years, followed by all times in high prices. It is the investors who bought at high price who will panic when prices drop to the bottom, but they must remember that we are in a bear market and eventually prices will rise again,” Kumar Gaurav , CEO and founder of Cashaa, told News18.com.
Suman Banerjee, CIO of Hedenova Fund in the US, said new investors should wait for the upcoming ‘crypto winter’ and invest in that moment to maximize gains. “I think we are going to have a crypto winter like what happened between 2017 and 2020. I would advise new investors to wait until that time and play momentum when Bitcoin prices rise again.”
However, Gaurav advised new investors to buy the dip. “Everyone who is interested in cryptocurrencies but has not yet invested should do their own research and find out the best time for them. At the moment they can get bitcoin or other cryptocurrencies at a discount.”
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