Why is crypto crashing today? Cryptocurrency markets have crashed to a new low of this year today (13th June, 2022).
The global market cap has shrunk below $1 trillion to $977 billion, around 12 % fall since yesterday. The global cryptocurrency market cap has fallen by around $1 trillion this year while almost every top coin is now worth half or even less than their all-time highs.
The immediate trigger for the crypto crash appears to be a massive sell-off by investors amid heightened inflation fears and pausing of withdrawal by crypto lending service Celsius. Investors are also continuing to stay away from riskier assets, which is reflecting in the stock markets as well.
Bitcoin, the biggest and most popular cryptocurrency, has fallen below $22,000 while almost all altcoins, starting from Ethereum, are bleeding prices since weekend.
Ethereum has fallen to its lowest level in more than 14 months, trading around $1155. Solana has fallen by more than 15% and is hovering around the $27 mark, according to CoinMarketCap data at the time of writing.
Experts say that the crypto price plunge indicate a falling risk appetite of investors. They are clearly wary of risky assets. With all its uncertainties and volatilities, crypto is considered as one of the most volatile instruments for investment purpose.
“The crypto market has been under pressure from the Federal Reserve, hiking the interest rates to combat inflation over the past few months. Bitcoin, Ethereum, and most cryptocurrencies suffered losses over the weekend after a broad sell-off following the data showing US inflation hitting a 40-year high,” said Edul Patel Co-Founder and CEO of crypto investment platform Mudrex.
“As investors seem to have panicked, the number of crypto liquidations has been high since Friday. Bitcoin and Ethereum plummeted as much as 7% each and are currently trading at their lowest at US$25,000 and US$1,300. The bearish trend may likely continue in the next coming days,” he added.
While altcoins have historically underperformed Bitcoin, this time they have an added pressure of potential regulatory roadblocks. A report by CoinDesk quoted an expert as saying that only a small number of altcoins are likely to survive such market movements.
Shivam Thakral, CEO of crypto exchange BuyUcoin said that the rising food, gas, and energy prices are putting tremendous pressure on the crypto market as Bitcoin and Ether have witnessed double-digit losses in the past 24 hours.
“After the consumer price index reported the highest inflation since 1981, financial markets across the globe have seen a sharp downturn,” said Thakral.
“The market is expected to remain choppy in the coming weeks and countries around the globe continue to report high inflation numbers. The current dip in the crypto prices allows investors to buy crypto at 2021 prices and we expect the seasoned investors to take advantage of the dip,” he added.
According to Darshan Bathija, CEO of crypto exchange Vauld, most investors worry that unless inflation numbers start dropping soon, the US Fed may have to tighten reigns by increasing interest rates at a faster pace than anticipated.
Bitcoin in Oversold Zone
“Bitcoin faced yet another significant correction, dropping to nearly $25,000, the lowest in over 5 months. Interestingly, the Dollar Index(DXY) is also at a six month high, gaining 2% in the last day alone leading to a drop in the Stock and Crypto markets. On the daily time-frame, the BTC trend has broken below the long formed triangle pattern. An immediate and key support is expected at $24,000. The RSI dropped below 30 as Bitcoin entered the oversold zone,” analysts at WazirX Trade Desk shared in a note.
Meanwhile, Ethereum corrected by over 20% over the past week meanwhile, Ethereum against Bitcoin dropped by more than 11% in the same period as Bitcoin’s Dominance broke above the 48% for the first time in nearly a year.
“The daily chart for ETH-BTC has broken below the descending channel pattern and fallen below its previous support of 0.055. The next support for ETH-BTC is expected at 0.038 level,” they said.
Story first Published on Financial Express