Is This The End Of Crypto?
Updated: Jul 17, 2022
The Current State Of The Crypto Market
The cryptocurrency world is currently in a state of chaos with blue-chip crypto's like Bitcoin, and Ethereum being 60-80% down from their all-time highs. Even prominent exchanges like Coinbase, (the largest in the U.S) have had to backtrack on their hiring plans and announce mass layoffs.
“After assessing our business priorities, current headcount, and open roles, we have decided to pause hiring for as long as this macro environment requires,” : L.J. Brock, Coinbase
It's as if the whole crypto ecosystem is on fire, and everyone is just rushing to exits but why?
Why Are Cryptos Falling So Sharply?
The simple one-word answer to this question is "Panic Selling". People have seemed to lose confidence in the crypto landscape because of a variety of reasons including the following. You can also check our detailed articles on these topics by clicking on the links attached:
Terra Luna Crash
Fall of Celsius and 3AC
Harsh Regulations by various governments across the world
An increasing number of scams in the domain
The above reasons have generated a lot of selling pressure in the market and caused the prices to fall. Needless to say, the crypto market is also being hit by the same factor impacting stocks and other assets across the globe. and other assets. Some of them are:
The Sudden Surge In Consumer Prices Globally (Inflation)
Rising interest rates by the US government
Increasing Crude Oil Prices
Stagflation (or economic stagnation) is commonly referred to as a period of slow economic growth and high unemployment It is usually accompanied by rising consumer prices (i.e., inflation) and decline/stagnation of the GDP of a country.
Now let's discuss some of them in detail. As Covid-19 Outbreak hit the world by storm governments all around the world printed excess cash and induced money into the system in hope of economic recovery. This excess money/liquidity caused asset prices to soar. However, things are different now central banks are now continuing to raise interest rates aggressively to counter the high inflation and suck money out of the pool. This is impacting all asset prices, including cryptocurrencies. The Russia-Ukraine crisis and increasing oil prices have added heat to this fire!
The other most important reason for downfall is the loss of confidence among investors. The problems at Celsius are undermining confidence in the broader cryptocurrency space just weeks after the collapse of a stablecoin called TerraUSD. This has caused fear in the market and has forced many people to move to safer assets like stocks and bonds.
Is Crypto Dying?
It's safe to say that the crypto market is going nowhere and is here to stay. Cryptocurrencies like Bitcoin and Ethereum have stood the test of time and are not likely to die. I will leave you with only one quote:
"Be Fearful When Others Are Greedy And Be Greedy When Others Are Fearful" - Warren Buffet
BONUS: It's not the first crypto crash!