Cryptocurrencies nearly collapsed due to restrictive policies implemented around the world to fight inflation by reducing liquidity from global markets. The wave of cryptocurrency sales causes panic among investors.
In cryptocurrencies, down sharply today, sales continue at 9pm, with the Fed increasing interest rates by 75 basis points.
Bitcoin, the digital asset with the highest volume, is trading at $ 20,547, down 7%, while Ethereum is down 12% to $ 1,069.
BITCOIN: WHY IS THE BIGGEST CRYPTO CURRENCY CRASHING?
The analysis, written by BBC Turkish, included the following statements: “Experts say this is linked to global developments. Cryptocurrencies aren’t the only thing that is losing value.
As the recessionary atmosphere spreads, inflation, interest rates and the cost of living rise.
Equity markets are also down: the S&P 500 index in the US has lost 20% since its last peak.
As a result, even some large investors cannot act as easily as they once did.
Ordinary people like you and me, as well as large companies and hedge fund managers, have no money to invest.
For many, it is too risky to invest in hard-to-predict instruments like cryptocurrencies at times like these.
It doesn’t have a regulatory agency, it doesn’t have a guarantee given by financial institutions. This means that after investing with your savings, if the value drops rapidly or you lose your crypto wallet, you may be left with nothing.
THE FALL IS ACCELERATED
Low-key but still important cryptocurrencies plummeted last month. This further reduced confidence in the cryptocurrency market. Many people have started selling. With the increase in the number of people selling Bitcoin, its value has decreased. As the decline continued, more people started selling and the decline accelerated.
This cycle continued like this. Unlike traditional investment vehicles, Bitcoin has no intrinsic value.
Katie Martin, editor of the Financial Times newspaper, remembers that there is no business model or money flow behind Bitcoin:
“Its value depends entirely and entirely on the amount that people are willing to pay for it. It’s a frightening situation because if enough people decide to sell it there is no less resistance.
“There is no guarantee that if more than a certain amount of people decide to sell it, its value will not drop to $ 10,000 tomorrow.”
WHY EXACTLY NOW?
While the whole picture was too pessimistic for Bitcoin, the following also happened:
Binance, the largest cryptocurrency exchange in the world, has suspended Bitcoin trading for a few hours. Although it was announced that this was due to a technical problem, not everyone believed it.
The Celcius cryptocurrency lending platform did the same, but justified it not for technical problems but for “extraordinary market conditions”.
Concerned about these two developments, investors have started selling more Bitcoin.
The first two elements caused the panic. Imagine not being able to withdraw money from your bank and hearing that others have the same problem.
At the first opportunity you would go to ATMs and try to withdraw money, and when everyone did, there would be more panic.