The Reason Behind Crypto Market Crash at 2022's End

The price of cryptocurrencies has been plummeting since the end of the year. The leading cause seems to be a lack of faith in cryptocurrencies as well as fear that they are fraudulent.

Another factor is tax evasion, which authorities have recently started cracking down on with fees and taxes on all cryptocurrency transactions being a likely result. This has led people to sell their digital assets for cash and spend it on tangible items instead.

There are many other factors that also contributed to this crash, but these seem to be the primary causes for why now might not be the best time for investors who might want to buy cryptocurrencies at advantageous prices.

What are the factors causing the price of cryptocurrencies to crash?

The fear factor that has been so prevalent has stemmed from the emergence of a new pair of cryptocurrencies known as Bitcoin Cash and Bitcoin Gold. These digital currencies were created from the same codebase as Bitcoin, but have different block sizes and will be mined using a different ASIC mining hardware.

This led investors to believe that these two currencies probably wouldn't be able to offer value in line with those of other leading cryptocurrencies, including popular ones like Bitcoin (BTC).

The fears were well founded, as both these currencies plummeted in value after their creation. Their prices have been dropping throughout 2018, which led investors to become wary of buying them now when they might be trading at a good price.

Another factor that has caused people to fear for the future of cryptocurrencies is the fact that regulators are now asking exchanges to cease operations in countries with less-than-desirable records on tax collection.

This has caused investors to trade their cryptocurrencies for local currency, effectively throwing a spanner in the works for those who operate mining farms and other companies that would have previously been profiting from their cryptocurrency endeavors at a profit.

The result was a flood of sales across exchanges, which led to even more investors selling their digital currencies, resulting in an avalanche of red numbers on values charts.

The final factor that contributed to the crypto crash can be traced back to governments in India and South Korea. These two entities have outlawed ICOs, and have called for an end to anonymous accounts on exchanges.

This means that anyone who was hoping to buy into an ICO will have a much more difficult time doing so, and will no longer be able to purchase cryptocurrencies like Ethereum or Ripple with cash or gift cards on popular cryptocurrency marketplaces.

Is the crypto market going down forever?

It's unlikely that Bitcoin will be trading at a very high value in the near future, as its price has been dropping for a long time now. However, this does not mean that it cannot rebound from its present value and be a reliable investment in the future.

There are difficult-to-predict factors that could lead to this rebound, but there are also factors that cause people to trust cryptocurrencies more than ever before.

These include the emergence of new coins such as Ethereum Classic, Bitcoin Cash, and Bitcoin Gold. This means that people who have held onto their digital coins now have a better chance of being able to sell them at a profit next year. There's also the fact that:

Bitcoin's price might be trading at less than half of what it was when they first started investing in it back in 2017.

Bitcoin and Ethereum are the most widely traded cryptocurrencies right now, and as such, they have a large share of the market.

This means that if they do go down in value next year, then it will probably be related to their relative value rather than their absolute value.

Final Thoughts

There is no reason for this crypto crash to last forever either. There are countless other coins in existence, with each having its own niche in the market that could help it thrive even if Bitcoin does not succeed.

The fact that there are so many new coins is a good sign for investors to consider investing in them too.

What is your opinion on this? What would you do next year if you have invested in cryptocurrencies in 2018 and they are now worth less? Please leave your comments below and share this blog post with your friends.

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