Crypto’s Nightmare $1 Trillion Price Crash: What Next For Bitcoin, Ethereum, BNB, Solana, Cardano And XRP?

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The combined bitcoin and cryptocurrency markets have lost nearly $1 trillion in crypto price crash since November causing turmoil for traders.

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The price of bitcoin has dropped from a peak of around $70,000 per bitcoin less than two months ago to a low of over $40,000 today – a drop of nearly 40%. Meanwhile, other major cryptocurrencies Ethereum, Binance’s BNB, Solana, Cardano and XRP have all lost the same amount.

The cryptocurrency market’s decline, from $3 trillion to $2 trillion, as measured by CoinMarketCap, comes after a period of massive growth in cryptocurrency prices that saw the market rise by just $200 billion two years ago – and increasingly traders. Believe this latest accident is only a temporary setback.

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“Although sharp, the most recent drop in the digital asset market was by no means unexpected,” Mikel Morch, executive director of risk management at crypto hedge fund ARK36, said in emailed comments. “Previously, we warned that market uncertainty and weak technical fundamentals made a low of $40,000 entirely possible.”

,[Bitcoin has] “It broke its recent stock market correlation, disappearing at the start of the late 2021/2022 equity rally,” DailyFX strategist Nicolas Kavle said via email. , then a group of late September between $39,600 and $40,700 comes into play.”

The latest crypto price crash, which wiped billions of dollars from bitcoin and the crypto market in a matter of hours, came after it was revealed that the US Federal Reserve may accelerate its planned 2022 interest rate hike and shrink its massive balance sheet. could start to do – some weighing on the equity markets as well.

“After the release of the minutes of the Fed’s December meeting, hinting at a more decisive move to ease its expansionary monetary policy to combat inflation, negative investor sentiment pushed bitcoin to head to $46,000,” Morcha said. Level lost.” “Once that support was breached, liquidated within minutes. For a few weeks now, we are clearly in a downtrend with no signs of a decisive reversal in sight.”

The crypto price crash comes some six months after the bitcoin price was hit hard by China’s crypto crackdown and Tesla chief executive Elon Musk knocked trust on bitcoin for looking sour. Bitcoin price hit a low of $29,000 at the end of July and then bounced back and climbed above its previous highs.

“The striking parallels between current price action and market movements between mid-May and August give reason for cautious optimism in the medium term,” Morch said. “A bounce to around $47,000 in the next few days could confirm that thesis while further losses would largely invalidate it. In any case, only a clear break above $50,000 could indicate a major reversal in the trend. and investors should naturally take into account the volatility of the nature of the digital asset market.”

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Other bitcoin and crypto investors are not worried about the recent downturn, confidently predicting a “strong rally” in the price.

The Fed caused a “knee-jerk sell-off” on Wall Street and the crypto market because of the belief by some traders that such a move threatens the liquidity that has benefited many asset classes, including bitcoin,” said Nigel Green. , Chief Executive Officer of Financial Advisors and Asset Management DeVere Group said in emailed comments.

“However, I believe that as the dust settles we will see a strong rebound for Bitcoin. This will be followed by others in the crypto market” – such as Ethereum, Binance’s BNB, Solana, Cardano and XRP- “Because bitcoin and other digital currencies are widely regarded as a shield against inflation.”

Over the past year, Ethereum and its biggest rivals Binance’s BNB, Solana and Cardano have outperformed the price of bitcoin. The price of Ethereum is up 165% over the past year despite the recent crypto price crash. Solana, now the fifth largest cryptocurrency by value, has seen a massive 6,500% increase this January 2021.

“Bitcoin has not only underperformed the crypto-space over the past few weeks, but with a raft of altcoins… “Bitcoin’s market dominance is now just under 40%, compared to just under 70% this time last year.”

While many bitcoin and crypto investors are confident that bitcoin and the broader crypto market will rebound, others see the continued extreme volatility on the crypto markets as a problem that needs to be resolved.

“Whatever the merits of such wild swings of cryptocurrency, they will prevent it from replacing traditional currencies at any time,” Russ Mold, investment director at AJ Bell, said via email.

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