{"id":5845,"date":"2022-01-24T22:47:56","date_gmt":"2022-01-24T22:47:56","guid":{"rendered":"http:\/\/egrowonline.com\/?p=5845"},"modified":"2022-01-24T22:47:56","modified_gmt":"2022-01-24T22:47:56","slug":"why-is-bitcoin-crashing-your-crypto-crash-questions-answered","status":"publish","type":"post","link":"http:\/\/egrowonline.com\/?p=5845","title":{"rendered":"Why is Bitcoin crashing? Your crypto crash questions, answered."},"content":{"rendered":"


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It\u2019s been a tough few days for cryptocurrency investors, though they should be used to it by now. The months-long decline of cryptocurrencies like Bitcoin and Ethereum has been accelerating in recent days, with prices now reaching six-month lows, wiping out billions of dollars in value. Here\u2019s what you need to know about the cryptocurrency price crash.<\/p>\n

How bad is it?<\/strong><\/p>\n

Cryptocurrency prices have been declining since November, and investors are now going on a selling spree that is causing prices to plummet even further. Since Sunday, about $130 billion<\/a> has vanished from the cryptocurrency market. Bitcoin was at about $35,000<\/a> on Monday morning, down roughly 50 percent from a record-breaking $69,000 in November, while Ether was at about $2,400, also down roughly 50 percent from a $4,670 high. (Both cryptocurrencies bounced back a bit by the end of the day.) The Shiba Inu coin, meanwhile, declined by 78 percent<\/a>.<\/p>\n

OK, sounds bad. Can you show me how bad in a chart?<\/strong><\/p>\n

Sure.<\/p>\n

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\n \"A<\/p>\n

\"A<\/p><\/div>

\nBitcoin price<\/span>
\nGoogle<\/span>
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Why is this happening?<\/strong><\/p>\n

It\u2019s tough to pinpoint what exactly is behind any cryptocurrency plunge, but analysts have been floating a number of theories. The fall of Bitcoin may be only one piece of a larger story, as the stock market<\/a> has also been trending downward since the beginning of the year and just had its worst week since March 2020<\/a>, likely in reaction to moves from the Federal Reserve to raise interest rates and ending its stimulus program earlier than it had originally planned. (Stimulus money going into peoples\u2019 pockets also helped to fuel the cryptocurrency boom we\u2019ve been seeing over the course of the pandemic.) In tougher markets, investors tend to sell their riskier assets, cryptocurrency being one of them. As more traditional investors have gotten involved in cryptocurrency over the last two years, the stock and Bitcoin markets have becoming increasingly linked<\/a>. The specter of forthcoming regulation could also be spooking investors, since the Biden administration is expected to release a federal strategy<\/a> on cryptocurrency next month.<\/p>\n

OK, but the little-guy investors are holding fast, right? What if this is just the Wall Street normies jumping ship?<\/strong><\/p>\n

Actually, the Wall Street Journal reports<\/a> that retail investors in particular seem to be driving the drop in cryptocurrency prices, as the volume of smaller transfers declined by more than 40 percent between the first and fourth quarters of last year. MarketWatch also notes<\/a> that new and short-term holders, some of whom just bought at the peak<\/a>, are mainly responsible for the sell-off.<\/p>\n

Are famous crypto boosters freaking out?<\/strong><\/p>\n

Certainly not out loud. Nayib Bukele, the president of El Salvador who made the country the first in the world to adopt Bitcoin as legal tender, announced<\/a> on Friday that his government had bought another 410 Bitcoin since prices are low. Elon Musk, arguably the most powerful crypto booster, tweeted out a meme taken from the movie Interstellar<\/em> on Wednesday to joke about the volatility of cryptocurrencies.<\/p>\n