Why did the crypto market crash, and will it recover?

In the wake of a recent wave of restrictions on cryptocurrencies that caused values to plummet, the cryptocurrency experienced a crash last June 13, 2022. Global inflation is viewed by many professionals who have been watching the cryptocurrency field for years as one of the main architects behind the industry's poor condition. One of the biggest increases in interest rates in 28 years has been made by the US Federal Reserve in an effort to escape the recession trap. A 0.75% increase initially had little impact on the cryptocurrency market, but many market observers now think it has exacerbated inflation rates.

The stock market has entered the red zone, which denotes a 20% decline from its most recent high. The Nasdaq has plunged 33 percent in 2022, while the S&P 500 has fallen by roughly 21%. With the Nifty50 dropping 15% from its all-time high (18,604.45) in October 2019, India is also experiencing the consequences of this persistent inflation. It is evident that inflation has contributed to the demise of cryptocurrencies, and a lot of people are becoming cautious in the idea of investing in such unstable assets.

China's effect

The market was already in turmoil when China declared a ban on cryptocurrencies, which caused prices to crash. All banks and financial organizations in China are forbidden from providing their customers with any services leading to cryptocurrencies, namely coin offerings, and trades. The country has recently ordered the entire shutdown of Bitcoin mining in its Sichuan province and instructed banks to stop supporting cryptocurrency transactions. According to the Government, the unpredictability of cryptocurrency and its speculative trading has substantially impaired people's ability to protect their property and upset the established order of things economically and financially.

Tesla's part in the market crash

Three months following the purchases of $1.5 billion (£1.06 billion) worth of bitcoin, Tesla decided to stop accepting Cryptocurrency payments for its items, causing a summer drop. Elon Musk the CEO of Tesla, said that the company was changing its mind on accepting cryptocurrencies due to concerns over the mining of Bitcoin's impact on the environment. Its effects were widespread and hit other cryptocurrencies as well.

WikiBit's Opinion: Will the market recover？

Since most in-demand cryptocurrencies have recorded slight increases despite the ongoing bear market, investors should have high hopes that the market will continuously recover. According to information from Cointelegraph Markets Pro and TradingView, the price of BTC has increased 20% in the past month to sit at $24,954, while the price of Ether (ETH) has increased a significant 62% to $1999.

The financial system can bounce back to its robust 2019 Quarter 4 state within 6 to 12 months thanks to the comeback of investors' interest and July's improved inflation data. If you‘re wondering if this would highly impact the crypto market’s recovery—-it does. These kinds of economic trends played a role in the crypto meltdown, and it's possible that the market is already beginning to rebound. Additionally, since the technology behind cryptocurrencies is expanding given that NFTs, NFT gaming, and the metaverse is becoming even more promising, it contributes to the market recovery.

As a reminder, WikiBit is ready to help you search the qualifications and reputation of projects in a bid to protect you from hidden dangers in this risky industry!

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