Why is crypto market crashing? Explained

The crypto market has nosedived over the past six weeks, wiping out nearly $1 trillion from the market. This marks one of the worst months for the digital asset on record.

The leading asset Bitcoin hit an all-time high of $126,000 in early October and then took a drastic fall to $81,000 on Friday before making a slight recovery over the weekend.

Bitcoin has dropped 30 per cent from its most recent high and experts say that uncertainty looms over the coin’s future.

Deutsche Bank analysts were of the view that the latest dip in market is totally different from previous crashes because “it occurred amid substantial institutional participation, policy developments and global macro trends”.

Experts pointed to two main reasons behind the uncertainty in the crypto market:

• Federal reserve’s next cut rate
• Threat that Artificial Intelligence (AI) bubble might burst

Crypto is highly volatile as observed when the U.S. President Doland Trump reignited trade war with China, prompting panic selling, wiping out $19 billion in just 24 hours.

CNN Business reports that the fall in Bitcoin’s price creates a snowball effect, meaning that the more the coin price falls the more investors have to sell to cover their positions.

Chief strategist at Interactive Brokers, Steve Sosnick, said that crypto has lost its charm as a unique asset and become a mainstream one. He added, “It is for normies now, who are going to treat it like any other risky, unpredictable investment.”