Why Is the Crypto Market Down Today If It Is True?

August 12, 2021

Investment

Ana Rojas

At the moment, there’s a lot of discussion and debate about the onset of a bearish crypto market – a period during which the prices of digital assets are constantly falling. Bitcoin is once again being buried and a long crypto winter is predicted. If the pessimistic forecasts are correct, then this time the bull market ended too quickly – most experts were confident that it would last at least until autumn or winter. But maybe the pessimists were in a hurry, and we do not see the trend change. Perhaps, it’s only one of the many predicted corrections? Let’s figure out why the crypto market is down today 2021, what these corrections are and what they mean for the traders.

Bitcoin Crash 2021

What is happening to crypto today? This year has turned out to be one of the most eventful for the crypto market. And the main drama unfolded in the spring. In mid-April, Bitcoin broke through the $65K threshold, but went down even more rapidly. According to Dow Jones Market Data, the number one cryptocurrency lost 41% in the second quarter.

It was the worst sell-off since the time when Bitcoin lost 43% in the fourth quarter of 2018 and the fourth-worst drop over a decade-long history. Moreover, it took four and a half months for BTC futures to grow from $28,800 to $65,520. But the sale was about twice as aggressive.

Bitcoin fluctuations have become the main driver of the roller coaster of the entire market. At the end of the first quarter, the market capitalization of crypto-assets reached $1.978 trillion, and in the following months exceeded $2.4 trillion. However, by June 30, the figure dropped to $1.447 trillion (having lost 26.85%).

What Makes Crypto Go Up and Down? 

For those who have been following the cryptocurrency market for some time, the situation and events of recent months will seem familiar.

Some random event, for example, Elon Musk’s tweet that Tesla will accept Bitcoins, raises the price of the currency to new heights, and people begin claiming that the general public is finally accepting cryptocurrency.

Then another random event occurs, for instance, Musk changes his mind, following which the rate of cryptocurrencies falls again, and all conversations about general acceptance are forgotten.

Why Is the Crypto Market Down Today If It Is Really True?

Why Is Cryptocurrency Going Down Today? Attempts to link the fall of the first cryptocurrency exclusively to the statements of the PRC authorities or Elon Musk are hardly justified.

Among the real reasons for the correction, experts identify three:

• Overheating of the market.
• The slowdown in the growth rate – if it does not grow 10% per week, then the holders start to get nervous and sell their assets.
• Crazy volumes of margin trading and belief in “endless powerful growth”.

The latest steps by the Chinese authorities to limit mining restrictions on mining and trading cryptocurrencies have caused some excitement on the market. The most serious blow was launched at mining. 

It is not yet clear what will happen to the equipment if production stops, and how the capacity will be distributed around the world. China accounts for about 60% of the hash rate, and this type of a shake-up will definitely have a short-term impact on the price.

However, China’s decision will affect the development of cryptocurrencies locally rather than globally. These decisions can’t fundamentally change the world’s attitude to cryptocurrencies overnight and strongly affect Bitcoin in the long term.

Will Cryptos Go Back Up?

Hashrate Recovery Signs

At the end of July, the hashrate of the Bitcoin network showed signs of recovery amid the gradual connection of computing power by some Chinese miners, who had already removed some of the equipment outside the PRC. After reaching a local low, its graph, smoothed by a 7-day moving average, follows an uptrend. The hashrate recovery suggests that at least some Chinese miners have successfully transported and connected their hardware.

Crypto Winter Threat – What Is the Future of Crypto?

The most negative scenario is Bitcoin repeating what happened in 2014 and 2018. Then, the rapid collapse was followed by a rebound, which attracted new sellers, which ended in a long disappointment.

The worst thing for the crypto market right now is to disappoint the optimists that a new “crypto winter” could be launched. This time, the circle of victims will be wider, and this risks prolonging the depression in cryptocurrencies.

Despite the volatility, large crypto investors believe that the current downturn does not indicate any fundamental shifts in the long term. It is necessary to wait for the market to stabilize, which may show the further mood of its participants.

Expectation of New Historical Highs – Will Bitcoin Go Up?

In general, experts believe that Bitcoin volatility will be high in the near future, but will decline every day. That is, the amplitude of price movement will decrease. At the same time, it is still important for the crypto investors to monitor the dynamics of American indices. As long as the indices and stocks are rising, cryptocurrencies will be less interesting to investors. 

Institutions are just getting ready for the resumption of trading activity. And at the stage when the correction of the US stock market begins, one can expect that capital will flow into the crypto market since the rate of its growth will significantly exceed the rate of growth of stocks and indices. Investors will go for more profit.

Apparently, the current situation of uncertainty will continue on the crypto market in the next month. Experts believe that Bitcoin is likely to continue hovering around $45,000 per coin. 

Nevertheless, even $30,000 per BTC is three to four times more than its average price in 2020. 

At the same time, experts regard a drop below $30,000 as unlikely, but possible. If this happens, the rate will quickly bounce back due to buying orders placed by institutional investors who expect to increase their investments in Bitcoin during correction periods.

In the fall, from September to October, a new cycle of growth of the Bitcoin rate will most likely continue. This will be facilitated, firstly, by the next wave of the coronavirus pandemic in the world, and secondly, by the recovery of the Bitcoin hash rate.

Interest in the cryptocurrency market is quite cyclical, but it is a movement to new heights each time, followed by a prolonged pullback of both the price and the general excitement. With the existing information background and the obvious overheating of the market, new historical highs should be expected sooner rather than earlier.

Moreover, fluctuations on the crypto market only contribute to the emergence of new tokens. By June 30, 2022, there were already 10,725 of them, which is almost a third more than at the beginning of the year, when only 8,153 projects emerged. Many of these tokens are available at a custody-free crypto exchange StealthEX. It provides the opportunity to convert over 450 cryptocurrency assets limitlessly, with no extra or hidden fees.

How To Buy Crypto?

Just go to StealthEX exchange and follow these easy steps:

1. Choose the pair and the amount for your exchange. For example, BTC to ETH coin.
2. Press the “Start exchange” button.
3. Provide the recipient address to transfer the coins to.
4. Move your cryptocurrency for the exchange.
5. Receive your crypto coins!

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The views and opinions expressed here are solely those of the author. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Updated July 8, 2022