Why is Crypto Price Falling?

Bitcoin reached a new all-time high over $67,000 on 8 Nov last year, according to Google Finance. More than two months later, the world’s most popular cryptocurrency has dropped as low as $35,000 on 22 Jan before rebounding and settling at over $37,000, today. In comparison, the S&P 500 has dropped about 9.3% since the start of 2022.

Investors who are familiar with #cryptocurrency, would know that volatility is a common aspect of crypto markets. Rather than panic selling, most of such investors will keep a long-term perspective of their #crypto investment.

Therefore, it will be good to possibly comprehend why and what exactly causing their prices to fall so as to have a better understanding on the developments related to cryptocurrency and the broader financial market.

Scouring answers from experts on the web, the following may be some of the reasons why the recent volatility has hit the crypto market so hard.

a. Rumours of U.S. government strategy to regulate digital assets may have triggered the current sell-off

b. Gradual belt-tightening by the U.S. Federal Reserve and its plan to raise interest rates this year to combat high levels of inflation

c. Fears of government crackdown on cryptocurrencies

d. Malicious actors hacking people’s accounts and leading to thieves stealing cryptocurrencies and NFTs

e. Market narratives have shifted from risk-on to risk-off and liquidity is drying up as the Fed and other central banks start to taper excess stimulus

f. Geopolitical concerns that drives market volatility in many tradable asset classes, as well as crypto assets.

Let us know what your thoughts are.

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