Why Is Crypto Going Down: Key Crypto Crash Reasons to Know 2022

The cryptocurrency market continues to collapse significantly amid a number of recent issues and a parallel tightening of monetary policy. The fall was also caused by the increase in rates by the central banks of different countries — they will continue to grow, and cryptocurrency rates will fall. So, why is cryptocurrency going down? Let’s try to find out!

Price of Crypto Going Down: What Is Happening?

Today, many crypto-enthusiasts seriously worry about their crypto portfolios and wonder why all crypto going down. On June 13, the bitcoin exchange rate fell by about 15%, and its value fell below $24,000, the lowest level since the end of 2020. According to Coinmarketcap, the first cryptocurrency is worth $22.2 thousand (as of June 14).

Prices of other cryptocurrencies also decreased: Ethereum — by 17%, Solana and Dogecoin — by 16%, Avalanche — by 15%. According to CoinGecko, the cryptocurrency market cap, which exceeded $3 trillion in November, was $1.02 trillion on the morning of June 13. Therefore, bitcoin’s price decreased significantly, affecting other crypto going down today.

Against this background, the Binance crypto exchange suspended the withdrawal of funds in bitcoins, explaining this decision as a ‘stuck transaction.’ The Celsius crypto lending platform also temporarily banned users from transferring and withdrawing funds due to ‘extreme market conditions.’

1-Day BTC Price Chart

Why Crypto Market Going Down: 3 Main Reasons to Know

The fall of bitcoin, which led to other crypto going down, began on June 12, when the rate fell to $27.5K. At the same time, the BTC value has been falling since March 2022 but remained at around $30,000 until the end of May.

Crypto experts name three reasons why crypto market going down today. Of these, Bloomberg considers US inflation statistics to be the main reason: in June, the US Federal Bureau of Statistics reported that the main consumer price index (CPI) rose by 8.6%. Inflation excluding food increased by 6%.

This is an anti-record since 1981, and the statistics appeared to be worse than analysts’ expectations, which assumed an increase of 8.3% for the CPI and 5.9% for core inflation.

The second reason is tightening the monetary policy of different countries. First of all, the US Federal Reserve, which in May raised the base rate (according to which US commercial banks lend to each other) by 50 basis points, to 0.75-1%. This is the strongest increase since 2000. Because of this, people prefer to invest in less risky assets than crypto going down.

The cryptocurrency market is also affected by the TerraUSD stablecoin collapse and related proceedings that have undermined investor confidence in such projects. After losing its peg to the US dollar, the Luna cryptocurrency used to issue it collapsed by 76.4%. The Luna Foundation Guard, behind TerraUSD, has spent $2.9 billion in bitcoin to defend the token’s dollar peg — nearly all of its holdings.

Read Next: Luna Crypto Crash: Key Reasons Why Terra’s LUNA Has Dropped 99.7%

On June 10, Bloomberg, citing sources, reported that the US Securities and Exchange Commission launched an investigation into Terraform Labs and its algorithmic stablecoin TerraUSD. The regulator will look into whether the platform violated the rules to protect its investors.

Why All Crypto Going Down: Will Crypto Market Recover?

Why is crypto going down? What do crypto experts think? Vijay Ayyar, Vice President of the Luno crypto exchange, recalled that in previous bear markets in past years, the bitcoin rate fell to 80%. He also noted:

Since Nov 2021, sentiment has changed drastically given the Fed rate hikes and inflation management. We’re also potentially looking at a recession, given the FED may need to finally tackle the demand side to manage inflation.

Vijay Ayyar also suggests that the BTC rate will drop even lower in the next two to three months.

CoinDesk platform experts expect another rate hike by the US Federal Reserve, following the example of Australia and Canada, where regulators raised rates after rising inflation. The European Central Bank is also planning to raise rates. Because of this, they will continue to abandon risky assets, including cryptocurrencies.

Why is crypto going down? Feel free to share your knowledge and thoughts in the comments below!

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