Bitcoin and other cryptocurrencies surprised the financial market over the weekend, with most coins falling to new lows in 2022. Bitcoin, the most popular cryptocurrency, fell below $22,000 for the first time this year, and other digital currencies are not exempted from the bloodbath.
On Monday, Ethereum traded below $1,200, Solana traded at around $27, while BNB traded a little over $200. Other cryptocurrencies also performed poorly over the weekend, and the bloodbath might continue for some period. Nearly all the top coins have lost more than half of their value from their all-time highs.
What is the possible reason for this massive fall in the market? Over the weekend, the crypto market lost over $200 billion. Since February 2021, this is the first time the crypto market cap stumbled below the $1 trillion mark. Experts have said the fall is not unconnected with the rising inflation in the United States.
Edul Patel, the CEO of Mudrex, a crypto investment platform, said there is a massive selloff because of the scary inflation in the United States. “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,” he said.
“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.
The extreme market condition is forcing investors to sell off their digital assets. No doubt, holding such volatile assets in extreme market conditions is a risky thing to do.
The rising inflation is not the only reason why investors are panicking. Famous crypto lending company Celsius has also worsened the situation in the crypto market.
Celsius is a crypto company that allows users to deposit their coins with it, while the company lends the deposited coins to investors. Users can earn up to 18% of their deposits. The company has about 2 million customers.
On Monday, the company released a statement that it is pending all withdrawals due to extreme market conditions.
“Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swaps, and transfers between accounts,” the statement said.
Cel, a token owned by Celsius, has suffered tremendously in recent times losing over 90% of its worth in a short period which has raised further concerns about the company.
Experts have said the situation at Celsius is adding fuel to the already burning fire. The unexpected move by Celsius has further led to panic among crypto holders, causing them to sell out their coins massively.
How long will this bloodbath continue in the market? It is difficult to predict what the market will look like in the coming days because even experts did not envisage such a massive dump in the market. However, some experts have predicted a further fall in the market in the coming days.
“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,” Shivam Thakral, CEO of crypto exchange, BuyUcoin said.
While investors see such a dip in the market as a buying opportunity, others see the recent activities in the crypto market as scary. Recall that last month, Luna and its stable coin UST caused a massive shake-up in the market. Read more
What happens in the market after this massive dip depends on whether the subsequent big news is positive or negative.