Cryptocurrency investors have had a tough few months. After soaring to record highs in late 2017, the crypto market has been on a downward trajectory ever since. Prices are down, investor confidence is low, and many are wondering what happened and why is crypto down? In this blog post, we’ll explore some of the reasons why the cryptocurrency market has seen such a sharp decline in recent months.
From market manipulation to lack of regulatory clarity to general economic cycles, there are many factors at play that could be causing the current bear market. Read on to learn more about why crypto is down and how you can protect your investments no matter what happens.
Reasons of Crypto Down
The crypto market has been on a roller coaster ride this year. After hitting an all-time high in December, prices have been on a steady decline, with no end in sight. So, what’s causing this crypto crash? Here are a few theories:
1. The Mt. Gox sell-off: In February, the world’s largest Bitcoin exchange, Mt. Gox, filed for bankruptcy after losing 850,000 Bitcoins (worth $550 million at the time). This huge sell-off put downward pressure on prices and spooked investors.
2. China cracks down on exchanges: In September, China banned ICOs (initial coin offerings) and shut down domestic exchanges, which caused prices to plunge.
3. Regulation fears: Another reason for the crypto crash could be fear of regulation. Numerous countries are currently weighing up how to regulate cryptocurrencies, and this uncertainty is driving away investors.
4. The Bitcoin split: In August, Bitcoin underwent a hard fork (a software upgrade that resulted in two separate currencies), which divided the community and caused confusion among investors. Prices have still not recovered from this event.
5. Low adoption rates: One of the main reasons why cryptocurrencies are struggling is because they have not been widely adopted by mainstream businesses and consumers. Until more people start using them as a form of payment, their prices are likely to remain volatile.
When Was the Last Crypto Crash?
The last major crypto crash was in early 2018. The crash was caused by a combination of factors, including regulatory uncertainty, market manipulation, and a general lack of confidence in the asset class. Bitcoin, the largest cryptocurrency by market capitalization, fell from its all-time high of $19,783 to a low of $3,858 in just over a month. Ethereum, the second largest cryptocurrency, fell from its all-time high of $1,419 to a low of $103 in the same timeframe. Cryptocurrencies across the board lost billions of dollars in value as investors fled the market.
Since that crash, the crypto market has been on a rollercoaster ride. Although there have been some significant price corrections over the past two years, the market has generally trended upwards since then. Bitcoin rose from its 2018 low to an all-time high of $64,000 in April 2021. Ethereum rose from its 2018 low to an all-time high of $4,381 in May 2021. The overall crypto market capitalization currently stands at nearly $2 trillion and continues to grow rapidly.
How Risky is Cryptocurrency?
Cryptocurrency is a digital or virtual currency that uses cryptography for security. A key feature of cryptocurrencies is that they are not regulated by any central authority, making them theoretically immune to government interference or manipulation.
However, cryptocurrency is still a relatively new and untested technology, which means that it comes with a certain degree of risk. For example, the value of Bitcoin – the most well-known cryptocurrency – has been highly volatile, swings wildly up and down in price. This makes Bitcoin and other cryptocurrencies a risky investment, as you could end up losing all your money overnight if the value crashes.
There have also been a number of high-profile hacking incidents involving cryptocurrency exchanges, where hackers have stolen millions of dollars worth of Bitcoin and other cryptocurrencies. This highlights another risk associated with investing in cryptocurrency – that it may be stolen from you by malicious actors.
Overall, then, investing in cryptocurrency is a risky proposition. You could make a fortune if the value goes up, but you could also lose everything if it crashes or you get hacked. Before investing any money in cryptocurrency, be sure to do your research and understand the risks involved.