Why is crypto crashing? Crypto crash 2022 | CoinCasso Exchange
Why is crypto crashing? Crypto crash 2022

Apparently, the cryptocurrency market did not go into crypto winter. On the contrary, it has been crashing like crazy during the past two weeks. Bitcoin, the dominant coin, has also fallen tremendously. As a result, all the tokens also lose their value.

In today’s article, we will talk in detail about the recent Bitcoin and the market crash, and discuss possible future tendencies.

Crypto market – current situation

The high volatility of all cryptocurrencies makes it almost impossible to prepare for any slurps or rises in price. That is why any changes, especially huge ones, are usually unexpected even for experienced investors. Check our blog post on how to minimize the risks of losing all your deposit when trading crypto here.

No wonder last week’s crash hit home. The largest cryptocurrencies and stablecoins plunged, and even diversified portfolios did not prevent investors from losing their money. Let’s have a closer look at what’s been happening in crypto and how Bitcoin’s value has changed over the last 7 days.

Crypto market 2022
Crypto market 2022

Past week on the cryptocurrency market

First of all, it’s necessary to mention that Terra (LUNA) has fallen 100%. Last Monday, its price was $60 and, only one week later, it is only $0.0001972. Why is this important one may ask? The thing is that LUNA was one of the most popular coins, just like Solana or Ethereum. At the moment, its total market cap is only $1.3B which is a tiny amount for the crypto industry. Such 100% value reduction was unprecedented and happened for the first time in history. Apart from losing money, investors are questioning themselves what it means for the market as a whole, and what other long-term movements it will provoke in the future.

Secondly, no industry analysis can be done without discussing Bitcoin’s price. As we’ve already mentioned before, it also dropped, like all the other tokens. As of the 9th of May, the BTC price was close to $30,000. Only a few days later, on Thursday, May 12 2022 it has fallen to almost $25,000. If we’re talking about a yearly perspective on Bitcoin’s value, it’s still dropping down. Its highest value was in September 2021 – more than $65,000.

Ethereum (ETH) ranks second and lost around $300 in its price during the last 7 days. On May 12, 2022, it was $1,783.43. However, past few days ETH value has been going up and down, and no one dares to say whether it’ll decrease further or recover. During the last 24 hours, for example, ETH went down 2.62%.

Most stablecoins remained stable in their value, except for UST. Tether (USDT), which is always supposed to be equal to 1 dollar, dropped to $0,95 on the 12th of May. Nevertheless, it has almost recovered to $0,99 as of today. Coinbase shows that UST has lost 93,93% of its value during the last week.

Last but not least, it’s crucial to mention total cryptocurrency market capitalization. Since November 2021, it declined around 20% which, unsurprisingly, was spreading panic among investors.

Why is crypto crashing in May 2022?

It’s a wide-known fact that cryptocurrency is closely connected with the world economy and international politics. There’s no one particular reason why crypto has been crashing during the past few weeks. Nevertheless, some worldwide trends should be taken into consideration as they do have a massive impact on all coins’ value, including Bitcoin.

  • Political arena

    Cryptocurrency is not directly related to any country or government. Still, the changes in both political and economic regulations of major world counties and organizations such as the USA or the EU, influence the financial world, including digital assets.

  • Inflation

    Inflation rates are now skyrocketing in most countries all over the globe. As prices go up, people do not have that much free money to spend on crypto coins.

  • Market sentiment

    Finally, investors’ behavior influences the industry and pricing as well. In these unsteady and financially challenging times, major players decide to avoid any risks and also withdraw their money from cryptocurrencies.

With all these factors combined, the May 2022 crypto crash does not seem all that mysterious and unexplainable anymore.

Current price of Bitcoin

Market crash 2022: Bitcoin price
Market crash 2022: Bitcoin price

Bitcoin’s been dropping for quite some time now. But does it really mean that one should not invest in crypto and investors should withdraw fiat currencies from their digital assets? During the last day, for instance, BTC has been relatively stable. It only went down by 0.64% in the last 24 hours according to CoinMarketCap.

At the beginning of April, we published an article on our blog explaining the reasons why is Bitcoin dropping. If you want to dig deeper into this topic, check it at this link. And if you’re a beginner investor or only consider buying tokens, you can read more on the history of Bitcoin and cryptocurrency in general here.

What’s next?

As of now, the only thing left is to keep calm and observe the situation. On the one hand, the recent plunge on the cryptocurrency market was stressful and worrying for the investors because all coins dipped at once. On the other hand, one should never forget about the volatility of each coin, no matter whether it ranks 1st or 13th.

CoinCasso’s also following all the crypto news daily and posting updates on our website and social media.

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