Why BTC, ETH and other cryptocurrencies fell the last friday?

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2 years ago

Bitcoin, Ethereum and major cryptocurrencies have lost $205 billion in just 24 hours on friday morning.

The main digital assets by market capitalization, Bitcoin and Ethereum fell in 24 hours causing a "snowball" effect in the other cryptocurrencies.

In recent days, the price of Bitcoin fluctuated around $40.000 but during last friday it fell below $37.000, a level that worried many investors.

While Ethereum fell 13.5% (adding 24% year-to-date), Solana and Cardano also saw big drops of over 16% and 15% respectively.

The drop resulted in an overall market cap loss of more than $205 billion for the entire digital currency market, according to CoinMarketCap.

Reasons for the Crypto Crash:

Many analysts believe that the big reason cryptocurrencies fell along with tech stocks is the more aggressive turn by the US Federal Reserve (FED) at its meeting in november, when Bitcoin fell 9.2% to $53,551.00.

This meant an accelerated pace of phasing out and raising rates, a move away from the policies that have powered crypto since 2020. "The Fed clearly misread the [inflationary] situation and now they have to be aggressive with the Fed tightening, and this has caused Treasury yields to skyrocket," Edward Moya, senior market analyst at Oanda told Fortune.

Another factor could be the diversification of investors, who go for other alternatives to BTC, "who are going to be the main rivals that will face Ethereum until it becomes the next great block chain," says Moya. “Diversification trading has really hurt Bitcoin,” he argues.

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