Why is Crypto Crashing?

Why is Crypto Crashing

From the starting months of 2022, all cryptos are facing a slowdown. Even stable cryptos like Bitcoin and Ethereum are performing slow. There are many crypto traders that are curious to know why is crypto crashing and what are the actual reasons for it.

The Crypto market has enjoyed a great bull run in October-November 2021. Many cryptos hit the new ATH this year. In terms of such circumstances, 2021 is considered a golden period for the cryptos.

As cryptos skyrocketed in the starting months of 2021, Seems 2022 is not that much lucky for the crypto traders. Here we will try to analyze the main reasons why the crypto is facing this much slowdown.

We tried to find out on other crypto forums about the current market situation. As per most forums, the main reason for the current market crash is an ongoing crisis in Russia-Ukraine.

As we analyzed the Russia-Ukraine clash can be one of the reasons for the slowdown of cryptos but not only. There are many circumstances that make the performance of cryptos slow.

Why is Crypto Crashing?

Crypto crashing depends on many circumstances. Many crypto traders think that the Russia-Ukraine conflict impacted negatively the cryptos. However, it is not just a single event that is responsible for the latest crash in the crypto market. Here we will mention the timeline of events that led to the Crypto crash:

1. Ban of China on Cryptos

Recently, the Communist government of China announced to ban Cryptos completely from the Chinese market. The government ban led to the crackdown on not just cryptos but also on exchanges. The huge turnover in the crypto market came because of the China ban.

China was one of the largest markets for the cryptos, as well as for the miners. As we found through media reports, Crypto miners of China were forced to shut their operations overnight. The Chinese crypto exchanges moved their offices to other locations like Singapore, UAE, and other countries that have crypto-friendly environments.

2. Crypto Ban News from India

India is home to 80 Million crypto traders. India is also considered one of the largest countries with crypto traders. The recent news from India affected negatively the performance of Cryptos.

In a parliament notification, the Indian government announced a ban on cryptos but didn’t clear its position. However, during the recent parliament season, India imposed a 30% tax on cryptos.

3. Panic selling

Due to ban news, crypto traders started to panic sell. In China, almost every crypto exchange shut its operations. The actions of the Chinese government forced its crypto traders to sell out their existing assets. Along with popular exchange Huobi Global, Chinese crypto exchanges moved their offices to other countries.

When the same news sparked in India, many crypto traders sold their assets and exited from the market. Indian crypto exchanges tried to persuade Indian traders but seem that didn’t work. Due to such events, cryptos not just lose their market share but also their value.

4. Tapering by the Federal Reserve

Fed officials indicated recently that they’re ready to begin “tapering.” Tapering is the process of slowly pulling back the stimulus the Fed has provided during the pandemic.

As per the report of CNBC, the Fed has never had to pull back from such a dramatically accommodative position in the past. Some market experts indicated that the Tapering event of the Fed impacted both the Crypto and the stock market.

5. Tech stocks Performance

It’s still not clear how much tech stocks performance affects the performance of the crypto market. But, as we analyzed that when tech stocks are facing slow down the performance of cryptos also follows the same bearish path.

The prices of tech giants’ stocks are also showing a bearish performance from the last few months. There is optimism once tech stocks prices start to recover the crypto market can also gain its position.

6. Russia-Ukraine conflict

Russia and Ukraine both are considered crypto-friendly countries that have large amounts of crypto traders. Some of the big crypto miners operate from CIS countries. Many crypto experts indicated that the Russia-Ukraine conflict also led to the latest crypto crashing.

However, the bearish performance of Cryptos started in December 2021. Long back before Russia’s attack on Ukraine. There are signs that the recovery of cryptos can start at the month end of 2022 if everything goes fine.

Conclusion

Why is crypto crashing actually, it’s not easy to find out. But market sentiments affect the performance of cryptos undoubtedly. Today, Cryptos are one of the most profitable investments in the current market. Some cryptos have given their investors 10X return in a short period. Such market sentiments attracted millions of crypto traders to the market.

Crypto Crashing didn’t affect the number of crypto traders. However, Cryptos are not just profitable but extremely volatile assets in the market as well. If you’re planning to invest in cryptos, a risk analysis is essential. How crypto performs and what actually led the bull run or bearish in the crypto market, it’s still not clear.