Cryptocurrencies are one of the many innovations that have changed the world. Although it hasn’t achieved massive global acceptance, we can see that there is potential in the industry. The utility is growing, with many industries accepting it as one of their modes of payment. You can even use crypto to fund your bet account if you want to try your luck on NFL London Game odds.
Unfortunately, since the turn of 2022, the crypto market has been struggling, especially with the various activities hampering the community. We can see that some major markets have been affected by these happenings. Undoubtedly, crypto keeps getting inadequate representation throughout the new year.
Although we experienced some significant leaps at the start of the year, going further into the year hasn’t been too good. Bitcoin, the world’s largest cryptocurrency, has experienced significant hits throughout the year. It has slid down and become highly volatile, trading way below its all-time high price.
With Bitcoin experiencing a significant fall in price, we can tell that the entire market will suffer from this massive fall. You don’t need an expert to tell you that the crypto market hasn’t been too fair to its participants this year, making the entire industry unattractive to outsiders. The price fall since the start of the year has been baffling.
Many experts have predicted a bounce back for the crypto world, but it hasn’t picked up. We’ve experienced more falls. The question remains; why is the market experiencing a significant price fall throughout the year? Below are a few reasons why we think this is happening to the crypto market in 2022.
The US Central Bank
Many experts believe that the current US central bank’s laser-focused actions to battle inflation are a significant driving force to the crypto market experiencing price drops. With higher inflation and significant macroeconomic headwinds, there are speculations of major raises in interest rates.
These rate increases are set to strengthen the US dollar. As a result, there is a significant risk to tech stocks and cryptocurrencies. A stronger dollar brings the fear of risky growth assets tumbling. Therefore, Bitcoin and other cryptocurrencies have continued to suffer from these policy changes as the central bank looks for ways to strengthen the dollar.
Rough Start to 2022
If you follow the crypto market, especially Bitcoin, you’ll know that it has had a rough start to the new year. The cryptocurrency market has experienced significant price falls since the turn of the year. At the end of 2021, Bitcoin was nearly 70% up, which was an unimaginable return for the digital asset.
However, it soon experienced major hits as investors decided to enter a risk-off mood as they embraced the general flight to safety across the board. Investors have shown a collective interest in value-based investments rather than store-of-value investments or speculative stocks. So, it wasn’t a good start for Bitcoin and the general crypto market.
The woes kept piling up with the Fed raising interest rates, lessening the demand for growth companies and speculative risk assets. Therefore, the crypto market has experienced a massive drop and has continued in that trajectory throughout 2022, making it a bad year for these digital assets.
The LUNA/UST Debacle
The story gets worse as the year goes by. After a few weeks of struggling, we started to get some stability in prices, but then, the LUNA/UST debacle happened, further crumbling the market. Since the event happened, the crypto market hasn’t recovered, giving some of the worse days of crypto market.
Since 2020, we’ve been experiencing a rise in the crypto market prices, and the year-on-year profit has been high. Therefore, the crypto industry has a lot of excitement and growth. As a result of this growth, more people have decided to participate in the market. But this year hasn’t looked too good.
Away from the LUNA/UST problems, Celsius was another significant contributor to the price falls. The company promises a massive return on investment as a crypto holdings firm. And as the crypto world endured a massive fall in prices, the company couldn’t keep up, leading to more problems for the market.
Crypto Being a Risk Asset
As a risk asset investment, there is a lot of volatility involved. And for many years, it has been one of the major attractions since it has experienced massive leaps in prices. However, this year has brought many issues that have affected the market, and it is a risk asset that has caused more price falls.
