Cryptocurrency

Will Crypto Recover? Top 3 Reasons for Crypto Crash 2022!

WILL CRYPTO RECOVER? After the epic Terra Luna fall? This is most likely one of the most pressing concerns for every cryptocurrency user these days. 

The global cryptocurrency market has plummeted in the last two weeks. Several prominent cryptocurrency prices decreased in value in 2022.

During the current downturn, the price of one of the top cryptocurrencies (Luna) has nearly reached zero. Despite the enormous meltdown, this is likely not the worst the global crypto community has seen so far.

Bitcoin and Ethereum crashed along with other top cryptocurrencies. Their values plunge in the latest crypto crash. It affected traders and investors worldwide. Both investors and buyers are curious to find out will crypto recover or is this going to be long-term?

Let’s find out. 

Why Crypto Crashed and Will Crypto Recover?

     1. China’s Ban

Prior to China announcing a ban on cryptocurrencies, the market was already in turmoil following Tesla’s decision.

All banks and financial institutions in China were forbidden from providing their customers with any services involving cryptocurrencies, including the offering and transaction of cryptocurrencies. China’s financial industry also discouraged cryptocurrency trading.

This was a setback for crypto miners. It had a huge impact on cryptocurrency’s reputation around the world and it affected the market as well. However, we cannot determine the market ups and downs based on this fact entirely.

     2. Market Volatility 

In June, the severe market crash affected most of the cryptocurrencies. It comes after various cryptocurrencies experienced record highs during 2021, with one Bitcoin token recently hitting a price of £50,546.71 before experiencing major drops.

Other coins followed Terra’s demise. Investors feared similar ventures would continue; eventually, panic overtook the larger industry, and even relatively blue-chip currencies, such as bitcoin itself, plummeted. 

The difficulty is that the system runs best if Luna is worth anything. For a time, it did, owing to a bold offer of paying a 20% return on deposits held in the cryptocurrency. Then, amid the meltdown, as traders began to withdraw their resources to pay liabilities everywhere, it didn’t. 

This set off a “death spiral,” in which investors converted Terra to luna, lowering the price of luna, which in turn reduced the value of luna, resulting in the next redemption lowering the value of luna.

     3. Tesla’s Contribution

Bitcoin is one of the most valuable cryptocurrencies by market capitalization. It serves as a useful barometer for the crypto market as a whole, as other coins such as Ethereum (and smaller altcoins) continue to imitate its lead. 

The price of Bitcoin plummeted to less than half of its previous record high during the crash. Now Bitcoin holders across the globe want to know when will crypto recover? Well, besides the mainstream investors, Elon Musk’s Tesla has a lot to contribute.

While the price had dropped significantly by December 2020, the cryptocurrency experienced an excellent year in 2021 that saw its value soar. After the revelation that Tesla had purchased $1.5 billion (£1.06 billion) worth of Bitcoin shares, the price of both the crypto and Tesla skyrocketed. 

As a result of Tesla’s decision to rescind the policy of accepting Bitcoin as payment for its products, Bitcoin and other digital currencies declined by 21.43 percent. Ethereum was down 35.56 percent, Binance Coin was down 45.20 percent, Dogecoin was down 35.12 percent, Uniswap was down 45.42, and Litecoin was down 44.55 percent.

It’s also worth noting that, despite its environmental concerns, Tesla still has its Bitcoin holdings, as Elon Musk verified on Twitter. Tesla CEO Elon Musk said that Tesla has not sold any Bitcoin to “clarify conjecture.”

How Soon Will Crypto Recover – Market Fluctuations and Predictions

This is the hot topic these days: “Will crypto bounce back?“, and if so, when?

To answer the questions, there are a variety of viewpoints and a wide range of responses, so do what is best for you and your situation. Bitcoin’s value has risen dramatically over the past year, but the market’s volatility is still apparent, with periodic price drops.

Alexander Vasiliev, Global Payment Network Mercuryo Co-Founder, says that for now, a support level of $40,000 [£28316.20] is likely to be seen for bitcoin if the selling continues. If this trend continues, bitcoin may reach an additional high of $70,000 [£49,553.35] in the medium to long term.

While it’s not at the all-time highs it reached in mid-April, the cryptocurrency’s current price is still higher than it was at the same time last year, and by quite a margin. The price of Bitcoin has risen 65,800.91 percent since February 2014.

Although Bitcoin recently reached a new all-time high, it was a rather typical uptick for the cryptocurrency, which is known for its unpredictability. 

That’s not to imply investors shouldn’t be concerned by swings in either side; investing professionals advise against making large investment adjustments based on routine variations.

Conclusion

Cryptocurrency markets can be quite volatile at any given time. Analysts’ forecasts can go wrong at any time. Whether you should invest in cryptocurrencies depends on your portfolio size, risk tolerance, and experience in the financial markets. Make sure to do your own research wherever possible. Also, you should never trade or invest money you can’t afford to lose.