Cryptocurrencies experienced a disastrous plunge on Sunday, following the release of Bitcoin's weekly report. The bitcoin market cap has dropped to nearly half its value since December. Here are five main reasons for the crash in the crypto market.

1- Luna-Terra crash is the reason behind crypto’s plunge to its 18-month low.

 Many people have been talking about the Luna-Terra crash as the reason behind crypto’s plunge to its 18-month low. And there are indeed many reasons for this crash, but this particular event is one of them. The Luna-Terra crash occurred on April 24th, 2019, at 12:30 PM EST (5:30 PM GMT). It happened when a large amount of Siacoin was sent from an address with over half a billion dollars worth of Siacoin.

When you send a cryptocurrency to another person or entity, you need to ensure that they will not be able to trace your transaction back to yourself. This is why you need to use different addresses and ensure no one can link them together. However, one person managed to do this very thing by sending out a large amount of Siacoin at once.

This has led to the conclusion that hackers could have been involved in this event and were trying to steal some money from investors who bought these coins early.

 2: Celsius Network

Celsius Network, a Decentralised Finance, announced on Sunday that it is freezing all the crypto transactions citing “extreme market conditions.” Following the shutdown, an enormous sell-off was witnessed, where all the cryptos plunged by up to 10%.

Celsius Network claims that it has frozen over $10 million worth of cryptocurrency assets and froze more than 70 wallets. The firm started in its blog post that it had to take this step due to the ‘unstable’ market conditions and volatility.

The company also added that they are working with their legal team and auditors to ensure all necessary actions are taken. In addition, various other crypto exchanges worldwide have followed suit and halted their services temporarily or permanently due to ‘extreme market conditions.

3- Regulatory challenges

 The crypto market has been plagued with regulatory challenges since the beginning of the year.

The first challenge came from China, where authorities have banned ICOs and other activities related to cryptocurrencies. This has left many investors in the lurch trying to get their money out of exchanges, which regulators are shutting down.

The second challenge came from South Korea, which announced that it would ban all anonymous trading accounts and impose a tax on those who hold virtual currencies. This move was soon followed by India, which also announced a ban on using cryptocurrencies for illegal activities or money laundering.

Then there was news that the U.S. Securities and Exchange Commission (SEC) had approved a cryptocurrency exchange-traded fund (ETF) proposal that would see an influx of new money into this space. However, it wasn’t clear whether U.S.-based exchanges would receive approval first or if a foreign exchange would be used to list this ETF to comply with federal regulations.

In addition, reports circulated that Japan’s Financial Services Agency (FSA) was considering regulating crypto exchanges as securities brokers rather than dealers in virtual currencies under its existing law.

4- The interest rate hike is a significant reason for this.

The Federal Reserve Bank of the United States raised interest rates by 25 basis points on Wednesday, which will lead to a hike in interest rates for mortgage borrowers and other consumers. The Fed's decision was widely expected after it raised its benchmark rate by 2.25% last month.

The U.S. central bank's policymaking committee also said it expects to raise rates twice this year, bringing the total number of hikes to three from one previously anticipated by the committee.

5-The equity market

 If you want to know why crypto prices are crashing, look no further than the equity market.

The equity market is the largest and most liquid market in the world. It’s made up of all the companies listed on stock exchanges like the New York Stock Exchange and Nasdaq.

Crypto investors were hoping their investments would grow into something huge like an Apple or Google, but that hasn’t happened yet. Some people claim that it never will since there is no way to predict what will happen with crypto investments, given their volatility.

But let's take a look at how these markets are performing today and why they could be a significant factor in why crypto is crashing at this moment in time.

Conclusion. 

The Bitcoin news has been negative almost all of last week. SEC is rejecting the Winklevoss ETF, FUD in China, and soon after South Korea, the 1MB hard fork and the split that created a new currency, Bitcoin Cash. This has affected the market and caused a deep correction to its 18-month low. However, we are bullish on crypto for the long term because crypto is disruptive and can bring so much value to society. We think Bitcoin may be bottoming out right now, but we're patiently waiting to see what happens before making new investments.