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Three outlandish explanations for the $500 billion crypto market meltdown
Crypto supporters point to the Fed's interest rate hike, Wall Street, and Russia as the primary causes of the $500 billion crypto market wipe out.
Earlier Friday, the crypto market lost approximately $500 billion in combined market capitalisation. The market slaughter resulted in the liquidation of nearly $700 million in leading crypto assets. Bitcoin (BTC) has fallen below the critical support level of $40 thousand, while Ether (ETH) has also lost $3 thousand.
Many wild hypotheses have filled the internet to make sense of the drop, at a time when crypto supporters are discussing whether the crypto market has entered a bear phase. We'll look at three of these theories, which many believe contributed to the crypto market fall.
The following are the inflation measures used by the Federal Reserve Bank of the United States:
Consumer inflation in the United States has reached new highs, and the Federal Open Market Committee (FOMC) meeting on January 25–26 is expected to announce new interest rates. The Fed is forecast to raise interest rates three times this year, with increases ranging from 0.25 percent to 1 percent by the end of the year. Many market analysts feel that the growing anxiety about inflation, combined with the omicron's surge, has led to a sell-off on Wall Street, which has eventually trickled down to the crypto market.
According to one Redditor, crypto was invented to conceal asset inflation by creating another "pipeline" for the US dollar to flow through in order to inflate a different asset. The user Juicyjuicejuic commented:
"Crypto produces the ideal trading vehicle for a brief period of time before becoming the scapegoat for whatever crash is on the way."
The user went on to say that the cryptocurrency market's volatility is the reason "why bonds and stocks are plummeting because everyone gambled on crypto and moved money out of other assets to do so!"
The rising link between the Bitcoin market and Wall Street
Market analysts believe the growing correlation of Bitcoin with the equity market may have driven the prior fall. BTC has gotten more linked with the equities markets as a result of ETFs and institutional investors. The Bitcoin market has followed Wall Street's lead.
Russian central bank proposes a total ban on cryptocurrency
Another notion that appears to be gaining support is a recent report from Russia's central bank calling for a complete ban on crypto mining and trade. According to Cointelegraph, the Russian central bank compared Bitcoin to a pyramid scheme and sought an immediate ban on its use in Russia. The central bank also cautioned that cryptocurrency might jeopardise the country's financial sovereignty.
Russia has become the third largest Bitcoin mining hub, and many believe the central bank's proposal for a blanket ban has caused a May 2021-style market FUD, resulting to a sell-off.
The first significant crash of 2022 has triggered a selling wave in the crypto market; yet, professional traders continue to urge for hodling, claiming that a drop of up to 30% is not concerning in a bull market.
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By Crypto PiratesCrypto supporters point to the Fed's interest rate hike, Wall Street, and Russia as the primary causes of the $500 billion crypto market wipe out.
Earlier Friday, the crypto market lost approximately $500 billion in combined market capitalisation. The market slaughter resulted in the liquidation of nearly $700 million in leading crypto assets. Bitcoin (BTC) has fallen below the critical support level of $40 thousand, while Ether (ETH) has also lost $3 thousand.
Many wild hypotheses have filled the internet to make sense of the drop, at a time when crypto supporters are discussing whether the crypto market has entered a bear phase. We'll look at three of these theories, which many believe contributed to the crypto market fall.
The following are the inflation measures used by the Federal Reserve Bank of the United States:
Consumer inflation in the United States has reached new highs, and the Federal Open Market Committee (FOMC) meeting on January 25–26 is expected to announce new interest rates. The Fed is forecast to raise interest rates three times this year, with increases ranging from 0.25 percent to 1 percent by the end of the year. Many market analysts feel that the growing anxiety about inflation, combined with the omicron's surge, has led to a sell-off on Wall Street, which has eventually trickled down to the crypto market.
According to one Redditor, crypto was invented to conceal asset inflation by creating another "pipeline" for the US dollar to flow through in order to inflate a different asset. The user Juicyjuicejuic commented:
"Crypto produces the ideal trading vehicle for a brief period of time before becoming the scapegoat for whatever crash is on the way."
The user went on to say that the cryptocurrency market's volatility is the reason "why bonds and stocks are plummeting because everyone gambled on crypto and moved money out of other assets to do so!"
The rising link between the Bitcoin market and Wall Street
Market analysts believe the growing correlation of Bitcoin with the equity market may have driven the prior fall. BTC has gotten more linked with the equities markets as a result of ETFs and institutional investors. The Bitcoin market has followed Wall Street's lead.
Russian central bank proposes a total ban on cryptocurrency
Another notion that appears to be gaining support is a recent report from Russia's central bank calling for a complete ban on crypto mining and trade. According to Cointelegraph, the Russian central bank compared Bitcoin to a pyramid scheme and sought an immediate ban on its use in Russia. The central bank also cautioned that cryptocurrency might jeopardise the country's financial sovereignty.
Russia has become the third largest Bitcoin mining hub, and many believe the central bank's proposal for a blanket ban has caused a May 2021-style market FUD, resulting to a sell-off.
The first significant crash of 2022 has triggered a selling wave in the crypto market; yet, professional traders continue to urge for hodling, claiming that a drop of up to 30% is not concerning in a bull market.
Support us!