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Crypto markets crashed to 2022 lows, what is going on

Not even Bitcoin is safe.

words by: Sahar Khraibani
Jul 5, 2022

The past month has been a whirlwind in terms of the world’s economy, with inflation being on the rise and recession kicking in really hard. In the midst of this chaos, cryptocurrency has taken a hit as the crypto markets crashed to their lowest this year.


According to reports at first, the global market cap, which was previously $1.10 trillion, has shrunk to $1.02 trillion. In June, the markets crashed to a new low, shrinking below $1 trillion to $977 billion.


After reaching $3 trillion in market capitalization in November of last year, the value of all cryptocurrencies has decreased by more than $2 trillion. Nearly all popular coins are now worth half as much as they did at their peak. But why did this happen?


Well, it appears that a massive sell-off by investors amid fears of inflation, as well as the pause implemented on withdrawals from the lending service Celsius, caused an immediate crash in the crypto market.


The largest and most well-known cryptocurrency, Bitcoin, dropped below the $20,000 mark, while practically all alternatives, starting with Ethereum, suffered major losses. This indicates that investors have been avoiding risky investments, which in turn significantly affects the market crash.


And if we know anything about cryptocurrency, it’s that this is the most uncertain and volatile area for investments. In addition to this, the interest rates have been skyrocketing recently in an attempt to combat inflation—which is hitting a 40-year high in the United States.


Experts are sharing that rising gas prices, food, and energy costs are putting an extreme amount of pressure on the crypto market. They are also expecting that the market will continue to fluctuate over the coming weeks as inflation keeps rising in countries around the globe.


Obviously, this is an opportunity for investors to take advantage of this crash in the market and dip in the prices of crypto, as they have more or less reverted back to their price mark of 2021. However, most investors are concerned that the U.S. Fed may need to tighten controls by raising interest rates quicker than expected if inflation numbers don’t start falling soon.


While this crash is concerning for traders and investors, it is also indicative of a major economical crisis that we are and will continue to face for a long period of time.


Crypto is going both ways right now with brands like Gucci accepting it while Wikipedia has blocked donations with it.


Photo via iStock