The cryptocurrency market has a deep connection with volatility. This means that any coin or token can go up or crash within minutes. Nonetheless, this attribute of the industry excites traders and investors as much as it puts them at risk.
Throughout the last few years, we have seen volatility affect the prices of several significant tokens. If we compare it to its previous years, 2021 did not prove to be as remarkable for Bitcoin. Therefore, its entry in 2022 was also sluggish. Uncertainty and fear among crypto consumers ensured that the market was dragged in the last few weeks.
Bitcoin plunges and altcoins follow – it’s a bloodbath!
The price trajectory of most of the tokens in the crypto market has been slow since the last week of December. However, it was assumed that the market might rise and gain some stability in the new year. But the leading crypto coin was stuck in tight ranges around the $44,000 and the $50,000 mark.
Little did we know that the worst was yet to come. The recent slump in prices has crashed BTC’s prices below the $43,000 mark. It is currently priced below $42,700. Many investors had placed their stop losses around this mark. The slide below the support level might indicate that the bear run is here to stay for longer than expected.
Bitcoin and Ethereum achieved their all-time highs towards the end of the previous year. Yet both of these coins have witnessed ups and downs since then. Experts believe that the market will hold more volatile surprises in the coming days. Thus, they advise against deeply investing in the asset class under the current circumstances.
With the plunging prices of BTC and ETH, other notable crypto tokens have also shed a major part of their value. Almost every altcoin, including the likes of SOL, ADA, BNB, XRP, AVAX, and DOT has lost double-figure percentages in the last 24 hours. The market is drowning in red candles which is not a good sign at the start of the year.
What do the plunging prices mean for the crypto market?
There are several reasons which might be blamed for the underwhelming performance of the cryptocurrency sector. These stalling prices were also influenced by the Chinese crypto crackdown and the new Omicron variant of COVID-19. The statements of financial authorities and officials of the US government were of no help to the digital asset industry as well.
Different countries are moving to regulate cryptocurrencies. Therefore, the crypto community doubts what the future holds for them. Even though fluctuations were expected in the market, the recent price drops were not anticipated. Thus, the market might take a while to recover.
Investors are in a rather difficult position in the crypto market. Many of them have hit their stop losses and a few still expect the market to rise. Therefore, they are hodling on to their assets. However, if Bitcoin fails to recover in the coming days, it might fall to $38K-$40K. This would not be a positive sight for the cryptocurrency market as a whole.
The drag in the cryptocurrency market might be a consequence of several factors. However, the recent price crash is a major blow to the industry. Huge investments have been pulled out of the market, as the global crypto market cap shrank to $2.04 Trillion. Nonetheless, the role of whales and institutional investors is critical at this point. It will set a clearer trend in the coming days.