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What This Crypto Crash Could Mean For The Future Of Crypto

Is it a warning? Just a ripple? Or an event that portends the crash of crypto?

May 2022 has ushered in Bitcoin and cryptocurrencies dropping in value to levels that haven’t been seen since the crypto market’s super surge in 2020. The result: Nearly $1 trillion worth of value has been lost in just one month.

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Crypto Takes A Dive

Here are the specifics: The bitcoin price has dropped to around $27,000 per bitcoin, down 12% since May 11, and has dragged down the wider crypto market with other top ten coins Ethereum, XRP, BNB, Cardano, Avalanche, and Solana recording losses that were even steeper. Recently, Ethereum has crashed 22%, with XRP, BNB, Cardano, Avalanche, and Solana all losing between 25% and 33%.

The dramatic, and perhaps unnerving, sell-off comes after the $18 billion algorithmic Stablecoin terraUSD (UST) lost its peg to the U.S. dollar, wiping out the price of its support coin Luna, which has now lost nearly 99% of its value – all of which could drag the Bitcoin and crypto markets to even lower levels.

According to Bitbank crypto market analyst Yuya Hasegawa, “Bitcoin continued to slide and closed below $30,000 for the first time since last July, although the fall did not trigger a large sell-off and the price is trying to recover $30,000 in the Thursday Tokyo session.”

He went on to add, “The price of Bitcoin, however, could still fall due to the UST situation and worsening technical sentiment, but if the U.S. inflation continues to slow down, the macro environment will likely improve and the price will bottom out.”

Additionally, markets were recently broadly hit by the latest United States data on inflation that indicated the consumer price index continued to run hot throughout the month of April.

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What May Have Caused It

“U.S. CPI was a mixed result: even though it exceeded market expectations, it showed a sign of slowing down thanks to lower energy prices,” explained Hasegawa. “The result was not enough to completely wipe out the possibility of faster monetary tightening, but it was also not enough to strengthen that possibility as well. The market inclines to sell on that kind of uncertainty and that is why stocks and crypto fell, but there is also a hope that inflation in the U.S. will continue to alleviate.”

It also didn’t go unnoticed that the tech-heavy Nasdaq-led market experienced a 3.2% decline. Another indicator that might be a wakeup call in terms of investing: iPhone-maker Apple lost its title as the world’s most valuable publicly traded company, having been overtaken by Saudi Aramco, a major oil player.

Head of trading and research at asset management and tech company Trovio, Will Hamilton, succinctly summed up the recent activity. “The past week has seen turmoil that has spread across markets globally as the reality of hawkish central bank policy and widespread inflation is realized. Market drawdowns led by the tech-heavy NASDAQ spread across digital asset markets as investors continue their withdrawal from risk assets.”

Right now, it appears that the Bitcoin market is experiencing a bit of flux. Stay tuned.