Why is the crypto market down today? Bitcoin lost even more ground on Wednesday as it moved very close to the key level of $20,000 for the first time ever.
In the volatile global cryptocurrency market, traders kept selling cryptocurrencies, which led to one of the worst crashes in the past two years. In the ongoing crash, top crypto coins like Bitcoin and Ethereum have seen huge losses, while the market sentiment is still “extremely fearful.”
CoinMarketCap’s data shows a global crypto market cap of $896 billion, while Bitcoin dominates the market with 44.7 percent. The website tracks 19866 cryptocurrencies and 527 exchanges.
Following record falls over the previous two days, nearly all top cryptos are back in the red. In the last week, the price of Bitcoin (BTC) has fallen 31%. BTC’s price dropped by eight percent to $21,129 over the last 24 hours.
Bitcoin
According to Coinbase, Bitcoin plunged by as much as 10% to an intraday low of $20,166. The price last stood at $21,658, up about 3%. Since the peak of the crypto craze in November 2021, the world’s largest digital currency has fallen nearly 70%.
ByteTree founder Charlie Morris said $20,000 was close to bitcoin’s peak in last year’s bull run, so it “may serve as a support level.”
“Bitcoin has lost money since its 2017 peak at $20k, but past returns are outsized as well,” he told CNBC. Fears of rising inflation, rising interest rates, and liquidity problems have caused a lot of trouble in the cryptocurrency markets.
Ethereum
The second-largest cryptocurrency, Ethereum (ETH), has dropped by more than 15% to $1,029.
CoinMarketCap reports that Ethereum’s market capitalization is currently $128.79 billion. Since its record-high price of $4,891.70 in November 2021, Ethereum has lost almost 80% of its value.
Why is crypto crashing?
Today’s bearish behavior is mostly due to the possibility of a federal rate hike to control inflation, an influx of crypto funds, and less activity in decentralized finance (DeFi).
Inflation rates in the United States are currently at 8.6%, suggesting that the Fed will announce a rate hike this afternoon.
In the past week, investors pulled $102 million out of digital assets because they didn’t know if they were a good investment.
According to data from DefiLlama, the Total Value Locked (TVL) across all blockchains, including Ethereum, Tron, BNB Chain, Avalanche, and Solana, has dropped by more than 8% over the past 24 hours.
Aave, Lido, and Compound, DeFi lending protocols, have lost at least 30% of their TVL in the past week due to concerns over liquidity in Celsius, its rival.
Will cryptos fall more?
Cryptos may continue to rise if gains continue. For the first time since December 2020, Bitcoin fell into the $20,000 range on Tuesday but has increased slightly in the past 24 hours. Recent declines coincide with inflation levels rising ahead of the Federal Reserve’s two-day meeting.
It will take time for Bitcoin to recover from the massive losses it endured. If gains are consistent, the recent surge in value could help the crypto market recover from its losses, said Edul Patel, CEO, and co-founder of crypto investment platform Mudrex.
