The most-volatile asset market is making headlines for the Friday crypto crash that led to a massive number of investors selling off some of their crypto investments. The crypto market hit a new all-time low, shedding more than $1 trillion in market cap. The global market value of crypto fell from $3 trillion to $1.5 trillion in less than a few days. While some experts suggest ‘the crypto balloon’ will soon break off, others deny its existence.
After having a roller-coaster ride in its value in the last few years, the Crypto market started falling from November 2021. Despite having a high head-start at the beginning of the pandemic, Crypto crash Friday resulted from a continuous downfall in price in the last couple of months.
As of Jan 28, Bitcoin (BTC) lost 20% in value while Binance (BNB) had a 25% drop in its value. Following the trend, Ethereum saw a sharp 30% drop in value, causing a rough start to the year.
Although some suggest more investors can bring better stability to the market, investors don’t want to win the battle but lose the war. At present, they want to save their investments from getting burned from the crypto crash.
According to financial experts, the Friday fail show was a consequence of traditional economic factors. These factors included planned hikes in the interest rate, a growing inflation rate, and a sell-off in the traditional stock market.
Friday’s crypto crash has impacted investors to a larger extent. There’s a global wave of regulations in crypto economies which led to agitation in the investment moves. The sharp fall in Bitcoin prices was enough reason to begin sell-offs in the market.
Lack of liquidity is said to be one of the critical reasons behind the event. When leveraged investors liquidate their coins, it is often equivalent to the overall liquidity of the market. Arising such problems gave a boost to the crypto crash.
It has been around three years since the crypto market has begun booming in the global space. Despite this, the industry has failed to gain investors’ confidence against security breaches that constantly cause fear. Reportedly, it has restrained investors from retaining their investments.
Itay Goldstein, a crypto expert and a professor, spoke to the media regarding the latest Friday crypto crash event. “The crypto sell-off is now part of broader sell-offs of risky assets that can be attributed to the Fed’s new signals of starting to increase rates to fight inflation,” he said.