Why has the average price of the crypto market down in these six months? Bitcoin as the oldest cryptocurrency and considered digital gold has plummeted from a price of $66k in November 2021, currently plunging to as low as $27k at the time of writing.
Many investors are worried that this decline might cause some of them to sell Bitcoin and trigger the price to fall even further.
Then what causes the crypto market down? Does it have anything to do with global geopolitical conditions?
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Bitcoin price drops in 2022
Within a year Bitcoin price formed a high of $68,789.63 formed in November 2021 and a low of $26,884.35 formed at the time of writing on 12 May 2022.
In a span of three months, the price of Bitcoin began to move downwards in March from the price of around $46k which gradually decreased from week to week and month to month.
This condition makes many cryptocurrency investors, especially Bitcoin, wonder why? Moreover, the decline occurred amid conditions where the United States faced a high inflation rate.
Although the Bitcoin price drop occasionally fluctuated between $41k and a low of $34k from March to April, the decline became sharper in early May.
On the daily timeframe, we can see a deep price decline since May 5 without any significant correction. Big investors are concerned the slide could hit as low as $21k, although it’s still around $26k at the moment.
Why are bitcoin prices dropping?
Bitcoin was originally created with the concept of being resistant to inflation, with a limited supply in which the scenario that less Bitcoin could be mined would lead to scarcity and consequently the price rise.
However, it turns out that this assumption is wrong if we relate it to the current conditions where the price of Bitcoin drops, and it is feared that a long contraction will occur.
According to the Times, the rationale why Bitcoin drops in 2022 is as follows:
Bitcoin is connected to financial markets
Bitcoin has become a part of the financial market that does not have a centralized authority that issues it. But has experienced poor conditions during the 2020 pandemic. Investors who previously expected the value of BTC to exceed $100k, have only become hopeless.
During the 2020 pandemic Bitcoin price fell more than 57%. Although after that the price of Bitcoin tried to rise, due to the stimulus provided by the central bank. The current condition of investors is worried about the chain effect due to the high inflation rate in the United States.
This condition has forced the Fed to conduct a tapering off policy and raise interest rates.
As a result, Bitcoin is also under pressure because it is a wild asset and is at risk of a long contraction. As the impact of investors choosing USD for assets that are considered safe-havens.
The strengthening of the USD can be seen from the increasing USD index, and not only Bitcoin, but the price of gold has also fallen sharply.
However, it is not known for certain that this effect will continue, if the Fed fails to control inflation to a lower level, it is possible that when the price of Bitcoin is already undervalued, demand will increase.
Bitcoin nature is very volatile
If you re-read Bitcoin’s price history since its inception in 2009, it has experienced sharp price increases and decreases. That is why Bitcoin is naturally a very volatile asset.
High price volatility by speculators can provide high returns in a short time than stock investments in general.
However, high volatility also hides high risk. This is why some countries do not accept Bitcoin as a legal tender because it is a high-risk asset. An unstable value has no requirements as a safe currency.
Worries about security and regulation
Even though Bitcoin has an anti-inflation concept that offers a more transparent decentralized payment system. The fact is that there are still obstacles regarding regulation in some developed countries, such as China, Germany, and the United States.
Regulation becomes an important priority for Bitcoin investors because it covers aspects of asset security.
Big picture
The big picture of Bitcoin comes into play when panic can cause Bitcoin’s value to be even worse. But on the other hand, there are investors who buy when the value is considered already in undervalue.
The price turbulence still allows a lot of people to wait and see, if the price reaches below $30k or $20k, the Bitcoin price will likely rise again
Ethereum price drops in 2022
Not only Bitcoin price, but Ethereum price also experienced the same thing. In one year chart, Bitcoin price formed a high of $2,105.97 in November 2021. But finally dropped to a low of $1,748.30 this May.
Analyzing the price of ETH in May in several days also experienced a sharp decline, starting in early April 2022. The long contraction caused the price to fall to its lowest level this year which may still continue even deeper.
The price is currently moving in the range of $2000 value, although in the one-hour timeframe there is consolidation, but fears that the price will drop further have made investors wait and see.
Why Ethereum price dropping?
The price of Ethereum is often correlated with Bitcoin, when the price of Bitcoin falls, most other cryptocurrencies also fall, Ethereum price is no exception.
The fall in the price of ETH has the same reasons as the fall in the price of Bitcoin. But on the other hand, fundamentally, the news about the delay in the software upgrade called “The merge” was also the reason for the fall in the price of ETH.
Global conditions due to war, high inflation, and the Fed’s policies also contributed to the reason for the decline in the price of Ethereum. The government’s increasing focus on regulation, and plans to issue its digital currency also contributed to the fall in the price of ETH.
BNB price drops in 2022
BNB is the native coin of the Binance exchange which is the largest global exchange. This exchange controls the largest Bitcoin transactions in daily trading volume compared to other exchanges.
While not as bad as Bitcoin and Ethereum, the price of BNB also plummeted from a high of $669.3 to a low of $213.52, a drop of more than 100% in less than a year. BNB’s current price is $297.80 which is pretty good for today up 10%.
The price of BNB seems to have started a downward contraction since November 2021, this also happened to Bitcoin and Ethereum which began to decline that month.
From $654 then down to $358 in early 2022. For three months the price contracted in a $356 low and $450 high range. However, the price finally dropped and broke low in May and formed the lowest in a year.
In the one-hour time frame, we see the price of BNB starting to creep up, after the previous day’s sharp decline.
In short-term trading, this can be caused by buying action at a price where an asset is considered to be undervalued. But this does not mean it is possible to release BNB once the price has gone up forming a high swing wave.
Why is BNB price dropping?
BNB coin is also one of the top cryptocurrencies today, even its position has shifted the ranking of LTC which was born first.
The decline in BNB was also triggered by global conditions, including war, inflation, the Fed’s policies, and also cryptocurrency regulations in a number of governments that tightened crypto rules.
However, the reason that the decline in BNB prices is not as severe as Ethereum is that the Binance exchange has a strong foundation as the exchange with the largest valuation of cryptocurrencies, especially Bitcoin transactions.
Another reason that strengthens the value of BNB is that more and more Defi are using the Binance Smart Chain which is slightly or more displacing the Ethereum blockchain.
XRP price drops in 2022
XRP was developed by Ripple Labs, it is the native token of the XRP Ledger, which is an open-source public blockchain, to facilitate faster and cheaper payments.
The price of XRP also dropped in 2022 although the downtrend is still contracting in an up and downswing in the $0.600 low and $0.760 high range.
In the course of the year, XRP formed a high of $1.70 and a low of $0.345. The highest price in a year was formed in September 2021 and the lowest was formed in May 2022.
The change in XRP’s price is similar to that of BNB today where after yesterday’s fall it seems to have started to rise 11% to the Price level: of $0.4334.
In the one-hour time frame, the price forms a morning star candle pattern which indicates a reversal pattern after the downtrend period began to weaken because it was considered the price to be undervalued.
Why XRP price dropping?
XRP’s current rating is below BNB from market capitalization value, meaning that this token is still one of the top cryptocurrencies that are still a crypto asset that investors pay attention to.
The XRP analysis, apart from involving global economic conditions, also looks at Ripple Labs’ plans to become a developer. The plan to lock a large amount of XRP in the escrow series is suspected to be one of the reasons for the fall in the price of XRP.
In addition, social media also affects the price of XRP, social media trends, and content about digital currency switching causes the price of XRP to drop.
Another reason is the global conflict, in which the geopolitical situation is also associated with the XRP price decline.
Cardano ADA price drops in 2022
Cardano is a Proof of stake blockchain with a vision to bring about global change. Cardano’s price has also in the year formed quite deep highs and lows. Where the price of ADA formed at a high of $3.10 formed in September 2021 and a low at $0.4065 formed in May 2022.
ADA prices have started to appear to decline since September 2021 with a significant downward trend swing. The price correction only formed a lower high than the previous high, indicating a prolonged contraction in the ADA price.
We can see that the XRP trend tends to decrease with a long contraction. Although today’s XRP price rose 37% to the price level of $0.5882, it’s still a question of whether it’s just a temporary swing in the downtrend.
The fall in the price of XRP in 2022 adds to the list of major crypto assets that have dropped, in addition to Bitcoin, Ethereum, and BNB.
Why is Cardano’s ADA price dropping?
ADA price had touched a low level of $0.4065, before rising again to a price level of $0.5877. Collectively, the decline in Cardano ADA has also been affected by the global environment in which cryptocurrencies are connected to financial markets.
In addition, the level of competition between blockchains also adds to the competition the crypto market can fluctuate easily. The trend of Twitter sentiment which has decreased in 2022 is also the reason for Cardano’s drops.
Solana price drops in 2022
Solana’s price the year formed a high in November 2021 at a high $260.06 and a low of $38.05 in May 2022.
Solana is one of the blockchains for Defi which is also a competitor to Ethereum. The price of Solana started in a downward contraction after reaching its highest level in November 2021.
However, the downtrend that occurs is still fluctuating with high volatility, so there are swings highs and swings lows by forming fairly wide peaks and valleys.
The price of Solana on the hourly time frame shows the support level at the $40 line and in that area, the price bounces back to the price level of $51.29.
We see this swing may still be temporary, as a result of the buy-in dips market by big investors.
Why is Solana’s price dropping?
The price of Solana drops in 2022 because the crypto market is crashing. And this is because the crypto market is connected to global financial markets. The average price of major cryptos including Solana drops due to the dominant impact of global economic conditions and geopolitics as well as security.
It seems that the market sentiment towards the crypto market is declining. It causes the adoption of crypto assets to decrease or many to sell their assets.
The second reason for the Fed’s policy of increasing interest rates by 50 basis points and becoming the largest in a decade. Also has an impact on Solana prices.
And the third reason is the existence of competing blockchains that may break down investments for portfolio balance.
Dogecoin price drops in 2022
Dogecoin within a year also experienced a downward trend. The coin, which is known as a meme coin and has the support of Elon Musk, formed a year high at the High: $0.6847 level formed in May 2021. And formed the Low: $0.07004 in May 2022.
Price fluctuations of swing highs and swing lows that are quite long-only occur from July to August 2021. While fluctuations in 2022 are quite low with a downward trend.
The current price of Dogecoin is $0.09105, up 18% from the opening price. This is after the DOGE price dropped to a low of $0.0618.
From the daily timeframe, it appears that by drawing a trendline from high to high. We can conclude that the downtrend tends to have a long-term price contraction.
Why is Dogecoin dropping?
Dogecoin experienced a skyrocketing price increase when it received the support of Elon Musk. But why more than nine months of Doge prices in a downward trend?
We see that there is indeed a transfer of investment assets by big investors. According to Analyticinsight, the price of Doge is dropping, as crypto investors choose Bitgert which brings a new environment with BRC20 smart contracts that offer faster transactions and security.
Doge prices are more influenced by investors in the community. In this context, the role of influencers may have an impact on DOGE prices.
Why is the crypto market dropping?
Broadly speaking, the decline in cryptocurrencies is due to a decrease in trading volume in the crypto market.
According to Forbes, this year the volume of Bitcoin trading transactions is only 34%. It is different from the previous year which reached 45%.
Some of the main reasons the crypto market drops are:
- Crypto correlated with Equities in the financial market. Cryptocurrency is here to promise to protect against inflation. But it seems that this assumption is wrong. Because crypto volatility that can go up 80% and fall 80% in a short time indicates a high-risk asset.
- Global economic condition. During the pandemic, cryptocurrency prices also contracted. And at this time when fears of high inflation allowed the Fed to fight aggressively raised concerns. As result crypto prices contracted sharply after the Fed raised interest rates by 50 basis points. And the signal still allows the Fed to increase interest rates in the future if inflation continues.
- Market worries. Investors were concerned about seeing the crypto market that tends to decline. It can cause them to sell their assets and cause prices to decline from the accumulation of falling demand.
What is the future crypto market?
The future of cryptocurrencies may still face other challenges such as digital currencies that will be issued by the CBDC. Because it is the official currency of the government’s central bank. It allows more guarantees of security in both short-term and long-term transactions.
Cryptocurrencies are digital assets that do not have physical properties. But the crypto market that has been occupying. It allows the industry to continue to grow and is favored by speculators for short-term gains.
And forever cryptocurrencies will be pros and cons among the public and government. Moreover, the development of blockchain technology also supports an easier financial system at low costs.
Final thought
Cryptocurrency is a risky asset, it can go up by hundreds of percent but it can also decrease by hundreds of percent as well. Even the UST Stablecoin backed up by LUNA also experienced a decline. Meanwhile, LUNA itself experienced an extraordinary decline of up to 92%.
And again, the history of cryptocurrency hacks and security breaches also gives a bad record, which makes cryptocurrencies risky. Investors must understand how to store their assets safely.
Note: this article is just a personal opinion and does not constitute investment advice or solicitation. Crypto, forex CFD is risky. Each investor is responsible for their investment.
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