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Why is Crypto Market falling down right now | Global Factors that affect crypto currencies performance

Major factors for crypto market falling

Since last few days most of the big and popular crypto currencies like Bitcoin(BTC), Ethereum(ETH), Binance coin(BNB), Solana( SOL) etc, have shown downward trajectory and if you are wondering what are the factors that affect performance of crypto currencies. Then in this post we are sharing current factors as well analysis of last two years where crypto currencies have performed negative.

Likewise the stock market, crypto currencies are also affected by the global news which directly impacts our economy or financial market.

For example, following are the main reasons behind current downfall of crypto market-

First is, Federal Bank’s comments regarding taking out the liquidity from the market by increasing interest rates and cutting down the amount of bonds it buys every months. As soon as this news came out a significant fall seen in Bitcoin and Ethereum prices.

And the second one is, when world’s second biggest crypto mining hub – Kazakhstan lost its internet access on Friday 07 January 2022 following the orders of Kazakhstan President and this internet shutdown took approximately 15% of the world’s bitcoin miners offline. Due to this bitcoin fall over 8% at one point.

So, these are the main global news which shook the crypto market latestly.

As the United states has fast become a prominent in crypto mining because it is home to some of the cheapest sources of energy  and many of them are being renewable one.

Crypto mining is the energy – intensive computing process that is used to create new coins as well as to maintain a log of all transactions. Since Kazakhstan is home to coal mines providing cheap and surplus supply of energy due to which Kazakhstan, the second biggest crypto mining hub, directly affected the crypto market.

From above facts, it is quite obvious that global news are able to make crypto market’s crash or boom.

If you look at last year i.e 2021, you will find that around May 2021 crypto was also in crashing mode in that time. Here is BTC graph for year 2020 and 2021 where you can see how bitcoin has reacted to other market like stocks and gold prices also. This make clear that more or less market events definitely affects crypto market.

comparison chart of bitcoin, gold and s&p

If we want to sum up the factors that are affecting crypto prices in headlines then certainly following are the main catalyst who have a significant role in driving crypto market or prices going up or down-


1. Market Events that leads to crypto market falling

As detailed above some of the events from year 2022 that caused the dip in crypto currencies. Also, if we talk about year 2020 when in mid March  covid pandemic hit the whole world  and it made the Bitcoin fell by nearly 57%. Then, like the stock market it recovered and become stronger than all time by hitting all time highs in upcoming years.

Then, Again in late year 2021,  when Chinese real estate giant Evergrande crisis occurred and investors feared that Evergrande is about to collapse and delist announcement by DiDi, the Chinese ride sharing giant , from New York stock exchange  again made slide in crypto coin prices.

If you want to read more about Evergrande crisis, read it here-

  Next recession in world Economy | Evergrande’s Debt Crisis

 

2. Regulations and controls by International Bodies

Government of all the countries especially developed and developing countries, are keeping their eyes on crypto currency market and the same is under their scrutiny as crypto has grown bigger with time and holding a larger chunk of financial market.

 

In year2021, when China government banned their financial companies for providing crypto trading services in order to build their own digital currency owned and run by Chinese government itself, it made a huge impact on crypto prices in mid-May – June 2021.

 

Prices had gone down significantly. Though crypto market has recovered itself from china crackdown on crypto later in same year.

In January 2022 when Russia’s Central Bank proposed ban on use and mining of crypto currencies Bitcoin has fell about 15% and reached to below $38000.

Also, the fact is that Russia being the third largest in Bitcoin mining  will definitely impact performance of crypto market.

Following is the graphical representation of prices of BTC, ETH, BNB during crash period and current time-

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Bitcoin price chart
Etherium price chart
Binance coin price chart

 

U.S., China, India, United Kingdom and Thailand has significant impact on Bitcoin price volatility. Any regulatory changes can affect the prices of crypto currencies which has already been seen in case of China and The United States – due to Major crypto mining hub.

 

3. Other factors for crypto market falling

Last year , we have seen the Shiba Inu and Doge coin prices gone crazy and raised their highest of all times. This all was due to some tweets or statements by Elon Musk by tweeting dogecoin is the peoples crypto or a random tweet on his pet’s name which make surge Shiba Inu 55%.

 And also, 17% drop had seen in bitcoin price in Mid May 2021 when Musk announced that Tesla would no longer accept Bitcoin as payment due to environment concerns.

So these things shows that how Crypto prices are also linked with statement from billionaires and how social media news can affect the prices of the same.

 Also, it  has seen in many instances when any big firm or company announces their interest in crypto or planning to accept payment in crypto currencies  , it makes the crypto prices strong as people build their trust more and start to invest.

For example, In January 2022 Elon Musk again pump the Dogecoin prices by 25% in a single day when he tweeted that his company is accepting digital currency Dogecoin to buy Tesla merchandise.

These type of statement increase the trust and belief of public in cryptocurrencies and in result prices surge when people start investing.

 

So Here, we have seen that global news do directly impact the prices and trends in crypto currencies and this is a clear evident that people’s trust in crypto market is strong and a long term thing as all the world is moving towards all kind digital world or web 3.0.

 

So what we should do when prices are dropping

Our advice is to keep your eyes on prices of your favorite crypto currencies and when it start to rise again ,then invest your money by diversifying the same in different coins.

 Always remember to invest smartly so that if any time you are in urgent need of money due to some medical issues, personal or family exigency , you  should never be dependent on your portion of invested money.

No one can be rich quick but consistency and your right investment decisions would definitely make you rich by the time.

 

  

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