The start of 2022 hasn’t been great for the cryptocurrency market in any way. Since the beginning of the New Year, the downturn that began in the majority of cryptos is continuing. The impact from Black Friday was also visible on Saturday, when the prices of the majority of digital currencies, including bitcoin-Ethereum, fell to the bottom. The market cap of the world is also down. According to an article, the drop in the last few days is also linked to Russia.
Cryptocurrency continues to decline. Because of the waning of investor confidence, the cryptocurrency market also experienced a drop on Friday. The effect of the fall in major cryptos was evident in the market cap. According to the data the market cap has fallen to less than 2 Trillion dollars. According to CoinGecko, the figure was the sum of 1.98 trillion. A drop of 7.64 percent was reported in Dogecoin’s price. Similar to that the price of Binance also fell. There was a drop in the amount of 10.11 percentages on Binance, 8.99 percent in Solana, 7.88% in the XRP. Avalanche was also down to 9.52 percent.
The main reason behind the decrease in cryptocurrency over the past couple of days has been the uncertainty over the Fed Reserve’s policy and several regulatory decisions. The uncertainty has led to concerns regarding the explosive increase in digital assets all over the globe. Additionally, it is reported that the Central Bank of Russia has also suggested an end to cryptocurrency mining and trading. This industry too has experienced an enormous setback. In a report from US investment firm Invesco, it was claimed that the bubble in cryptocurrency has burst and Bitcoin could fall to below $30,000 by the end of this year.
The situation of the most well-known cryptocurrency bitcoin was low on the day of its release. The price fell by 7.08 percent. As a result, the price dropped by 2,23,200, to the lowest level of Rs 29,28,746. In this decline, bitcoin’s market capitalization has also decreased to 55 trillion. It is also the lowest bitcoin level since August 2021. In November 2021, the cost of bitcoin reached its record high.
The bitcoin price was $68,990 in November. However, it has since slowed down. On Saturday bitcoin’s price is down by 46 percent since its record-breaking high in November. However, in the case of 2022 as of the beginning of the year, the cost of bitcoin has risen over 15 percent within just an entire month.
The top 10 cryptocurrencies in the world including other electronic currencies are experiencing a dramatic price drop. When we talk about the second-most well-known cryptocurrency, the value of Ethereum has plunged a lot. Although it experienced a price fall by 9 percent in the week prior, it fell by 9.59 percent on the weekend, its price dropped by 11.59 percent, or Rs 26,924 to Rs. 2,05,323. The price of digital currency Ethereum has also plunged dramatically over the past 24 hours. Since the beginning of this year, it has dropped by 20 percent.
This past Saturday Polkadot dropped 18%, DodgeCoin eight percent Shiba Inu 19 percent Litecoin 11.9, Binance Coin 13 percent, Solana 16 percent, Terra 22 percent, and Cardano 9 percent. The overall value of the cryptocurrency has dropped by around 25% over the past four days. The market capitalization of cryptocurrency worldwide dropped by more than 5 percent on Saturday to be below the $2 trillion thresholds with $1.98 trillion. As a result, investors have lost a total of billions of rupees.
Main Reasons behind Bitcoin and Cryptocurrencies Crash 2022
• Cryptocurrencies are regarded as an unregulated, risky market. In this case, the investor climbs to the top of the mountain within a split second and sinks to the ground quickly. As per experts, the primary reason behind the decrease in the value of cryptocurrencies is the plan of the central bank in Russia to stop mining within the country. The central bank claimed that cryptocurrencies could be a threat to Russia’s financial stability, and could cause problems for the citizens as well as impact the policies of the country’s monetary policy.
• The primary reasons for the decrease in cryptocurrency prices include liquidity, inflation, and liquidity US Federal Reserve. In light of all this, there’s an atmosphere of fear within the market. In addition, the primary reason for the drop in the value of cryptocurrency is the fact that Russia’s central bank Russia proposes to stop mining in the country.
• In a bid to protect the well-being of citizens in financial stability, as well as monetary sovereignty, it has suggested a ban on the mining and use of cryptocurrency within the country. Russia asserts that cryptocurrencies are being used to fund terrorism and for money laundering.
• The fact that crypto mining is a factor is also a reason for the decline in the value of coins. There have been concerns about the overuse of energy for cryptocurrency mining. Mining stocks in cryptocurrency also experienced decreases in December in an environment that was softer. Microstrategy dropped by 20 percent, and Riot Blockchain by more than 35 percent. Investors do not separately view the stocks and coins. Thus, the ease of trading in one can affect the emotions of the other.
• Also, there’s a change connected to regulation in America that is causing the decline in the cryptocurrency market. The US is indeed the biggest bitcoin mining country in the world right currently. To stay out of the strict regulations of their country, a lot of Chinese miners have set up their headquarters in America. In this scenario because of the overconsumption of energy, the environmental concerns in America have grown. The US Congress is set to hold a public hearing on the effects of mining crypto on the natural environment. The hearing is expected to be held at the beginning of January.
• A shift in Kazakhstan is in part responsible for the drop that is seen in cryptocurrency. Kazakhstan’s contribution to bitcoin mining has reached 18 percent. In Kazakhstan, the bitcoin hash rate decreased by approximately 14 percent because of issues with the internet in nearly every country. This led to a dramatic decrease in the value. Kazakhstan is the second-largest cryptocurrency mining market in the world. The protests that began with anger over the high price of fuel, are escalating. Many people have been detained. A lot of people have suffered fatal injuries. The impact of this situation in Kazakhstan is evident on the cryptocurrency market in the coming days too.
• China is stepping up its efforts to combat cryptocurrency, it required the Chinese government a few years to restrict cryptocurrency use. Currency However, the latest move has banned all mining and crypto transactions inside the Chinese government. China’s new laws are aimed at block exchanges, ICOs, and speculation. In a new move to prohibit cryptocurrency, China has ordered the end of bitcoin mining within its Sichuan province and also demanded banks to cease supporting cryptocurrency transactions. China’s central bank has made all cryptocurrency transactions illegal. Chinese officials are securing the technology in an overall battle between private and public power. In 2022, the regulators will likely keep up their enforcement activities and will be in line with President Xi Jinping’s vision of promoting prosperity for all.
Goldman Sachs estimates differ significantly. The analyst believes that, given the way that digital assets are being used around the globe, there is a chance that people will switch from gold to digital assets. If this occurs then bitcoin’s market share will grow. Goldman states that in the event of this happening it won’t be a surprise if the cost of bitcoin raises to one lakh dollars.