With Bitcoin still trading below $21,000 and the total crypto market cap under the key level of 1trillion USD, Crypto winter 2.0 is still in full force. A selloff in global risk assets combined with failures of key projects such as Terra Luna and concerns about crypto banks such as Celsius which halted withdrawals temporarily leads to questions on whether this could make investors turn their heads away from crypto.
The crypto markets’ bearish divergence is being exacerbated by macroeconomic factors such as rising inflation and the Federal Reserve’s expected interest rate hike.
Such plunges in crypto markets and in Bitcoin price aren’t unfamiliar for cryptocurrency veterans. During the previous crypto bear market which started at the end of 2017, we saw falls of up to 80-90% from record highs for blue-chip projects. The argument was being made that the crypto space is very different these days with a lot more market participants and that such extreme falls are unlikely, yet again we saw that the crypto selloff outpaced other risk assets.
Issues with the Cryptocurrency Market
Sidste uge, the Nasdaq index, which is heavily weighted in tech firms, collapsed. Bitcoin and other cryptocurrencies have a strong correlation with stocks and other risky assets. When these indices fall, so do cryptocurrency prices.
Cryptocurrencies are collapsing.
The crypto market has been on edge since the collapse of the so-called computational stablecoin terraUSD, or UST, and its cousin Luna in mid-May. The market has gotten increasingly concerned because of the failure of a crypto financing firm called Celsius. Because of the present market conditions, Celsius announced that all payouts, swaps, and account transfers will be halted.
Celsius impact
According to Celsius, which claims to have 1.7 million users, using the site can help you earn an 18% return on your investment. Celsius is a cryptocurrency deposit service that allows users to deposit cryptocurrency. The coin can then be borrowed by an institution or an investor. Som resultat, Celsius generates revenue for its consumers. The crypto market’s downturn, på den anden side, has damaged Celsius.
The value of Celsius’ own cryptocurrency, CEL, has decreased by more than half in comparison to the previous day. Generelt, inflationary fears and interest rate hikes are putting pressure on the markets. The market has become so entangled with other interconnected protocols and businesses. Similar contagion phenomena in crypto could result in massive drops. He went on to say that in the medium and long term, everyone is expecting more negative news. We might see more incidents like the Terra’s collapse in low markets, which exposed vulnerabilities and overleveraged ventures.
Solana lawsuit
One of the most recent developments is that Solana is being sued in a class action. The claim is that Solana is an unregistered centralized security. This could be due to the fact that the Solana foundation has huge influence on the Ethereum-rival ecosystem, therefore making it a hard case that Solana is decentralized. På den anden side, a project without centralized support isn’t very likely to succeed in the long run.
This lawsuit again raises concerns about the crypto space, because the basis of the industry is on the edge of the law – they claim that something which has all aspects of a security isn’t one. Considering an asset as a security brings in a lot of compliance costs and issues and can prove very costly for a project. We will see whether this will affect Solana and its price.
Dermed, with the new crypto winter in full swing, it’s questionable when is a good time to consider potential investment, or whether you should consider it at all. Should you decide to go ahead, and you don’t have an account with an exchange, you can compare and find the best exchanges her.
der er ingen garantier, når det kommer til at forudsige den nøjagtige pris i den næste Karolina Grabowska