Why is Crypto Down?
Updated: Apr 5, 2022
The crypto world has experienced a lot of volatility in recent times. Cryptocurrencies are very volatile, and the price can skyrocket or plunge in a matter of minutes based on the current happening in the world and among the major stakeholders.
The popularity of cryptocurrency as acceptable means of exchange increased in recent times. It is seen as a more seamless means of moving money from one account to another without the bottlenecks associated with traditional banking. However, cryptocurrency witnessed a dip in price a few times in the past few months. And this might dishearten those new to the space.
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Nothing happens without a causative factor. There are so many reasons why the crypto market is experiencing a lot of shaking, which we will look at in this article.
Reasons for the Fall in the Price of Crypto
Several factors could have contributed to the fall in the price of a cryptocurrency, and here are examples of how a news event can affect crypto prices:
#1. Tesla’s Announcement
In March 2021, the CEO of Tesla, Elon Musk, announced that the company would accept Bitcoin as a means of payment for purchasing their electric vehicles through its official Twitter handle. This announcement came as an endorsement of cryptocurrency from a company with a high global rating.
As expected, after this announcement, the price of bitcoin and other cryptocurrencies rose significantly. As a peer-to-peer payment system, cryptocurrency thrives on recognition, and Tesla’s announcement followed a hike in price. However, in May 2021, Tesla announced the suspension of bitcoin as an acceptable means of payment for its cars over concerns about its miners' use of fossil fuels.
This announcement led to a crash in the price of crypto. Although the company has announced the possibility of accepting bitcoin again as a means of payment in the future, that has not yet happened, and cryptocurrency is yet to recover fully from the announcement's impact.
#2. Announcement from JP Morgan’s Futures
JP Morgan’s futures report showing that investors in many institutions are gradually moving away from bitcoin to gold did not bode well for cryptocurrency in general.
#3. Biden’s Executive Announcement
After the executive order announcement by the Biden administration, cryptocurrency witnessed a sharp drop in value. This order is an attempt by the government to regulate cryptocurrency. This decision to handle the crypto market is linked to the ongoing disturbance in Ukraine, which has made the crypto market very volatile.
Summary
Cryptocurrency is known for its sensitivity to global news. Each decision by global players, wealthy individuals, or financial institutions, will either lead to a hike or a dip in price. Though cryptocurrency seems to be down one day or one week, there’s also likely it will experience an upsurge in the nearest future if the past is any indication of future events.
Derysq has built a web application that minimizes the impact of the dips on a user’s crypto portfolio by providing stable (non-volatile) yield to Bitcoin, Ethereum, USDC, Dai, USDT.
Derysq was developed in order to (1) maximize the gains, (2) insure against losses, and (3) provide stable passive crypto income (in a crypto world with highly volatile interest) to the users who park their funds in Derysq. Sign up here to be one of the early users of Derysq.