Last month, the crypto market faced two major meltdowns. This made the market drop below $1 trillion for the first time since January last year.
Crypto experts warned the investors about the possible another big crash in crypto prices, especially since the crypto market sell-off continues with Bitcoin and Ethereum, which fell to new 18 months lows.
The world’s largest cryptocurrency, Bitcoin, slumped under $20,000. And this will continue to hover close to $19,000, which sits close to 70 percent below its $68,000 high in November 2021.
Bitcoin dropped under $20,000 twice in the past weeks. This price point is critical for experts to know whether it further declines, similar to what happened in 2013 as well as 2017.
Meanwhile, the next most traded and valuable crypto Ethereum has lost its value by around two-thirds since November 2021. This value continued to hover over 1,000 Dollars on Friday.
As a result, things tend to be scary today since the bitcoin price has fallen lower than $20,000 once again.
What Factors Triggered the Latest Crypto Market Sell-Off?
The crypto market fall started in June 2022, along with the US stock market sell-off, triggered by the higher inflation rate and fear of more aggressive US Federal Reserve interest rate hikes.
Ideally, the crypto market must perform independently, unlike the traditional markets. However, it has been sensitive to the financial world’s mainstream movements.
What Does Bitcoin Price Drop Mean for Crypto Market?
Many experts expect the crypto market to experience another more drastic crash before recovery. That is especially true since Bitcoin constantly drops near $10,000. Not only that, but Ethereum is also expected to fall around $500, which is another 50 percent decrease from its current price.
OANDA senior market brokerage Edward Moya says, “It seems everyone is becoming a snowbird and avoiding this crypto winter.”
“If the bloodbath on Wall Street remains the theme in the third quarter, bitcoin could be vulnerable to one more ugly plunge that could have many traders fearing a fall toward the $10,000 is,” he continues.
Another Cryptocurrency Crash is Already Set, Experts Say
Experts say there will be another crypto crash; it has already set in. The crypto prices tend to remain low in the future due to the ongoing cryptocurrency liquidity crisis, layoffs, and market collapse. This “crypto winter” is comparable to what happened from early 2018 to mid-2020.
Several crypto experts say that crypto prices have hit bottom, while others expressed that the prices are more likely to slump even more in the next few weeks or even months.
Many cryptocurrency companies tried to ease losses, frozen withdrawals, and laid off personnel, resulting in doubts about the crypto industry’s health.
The US’s largest cryptocurrency exchange Coinbase announced cutting its 18 percent employees soon after the layoff at other companies like Crypto.com, BlockFi, and Gemini. Three Arrows Capital, a crypto hedge fund, may face liquidation, while Celsius, a crypto bank, halted withdrawals a few weeks ago because of the extremity of market conditions.
Wendy O, a crypto educator, and expert, says Bitcoin could possibly fall under $17,600. Once this happens, crypto market conditions can get scary. And many people involved in the crypto world wonder if things will change soon.
Will Investment Diversification Help?
If the crypto market crash happens, it is not the first time. So, the investors must prepare themselves. Remember that cryptocurrencies are known for being risky and volatile, displaying 15 percent price gains within 24 hours or 50 percent market swings within months.
During uncertainty and extreme volatility in the cryptocurrency market, investors can protect their finances through investment diversifications. Cryptocurrencies must only take a small part of their overall portfolio of mutual funds, bonds, and stocks to help them achieve longer-term financial goals.
According to the experts, now is an excellent opportunity to get involved in the cryptocurrency market while crypto prices are still low. However, prices are expected to fall further. It is recommended to stick to Bitcoin and Ethereum, the most well-established cryptos.
Meanwhile, the latest crypto market crash tends to hasten the government’s oversight process. Two senators in the US proposed legislation dedicated to the regulatory framework created for the crypto industry.
Mizuho Group analyst Dan Dolev even called this crash a “perfect storm.”
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