On 1st and 2nd December 2021, the price of Bitcoin and other cryptocurrencies have dropped piercingly, washing around $300 billion worth of value from the consolidated crypto market in just two days. The prices of Bitcoin have sunk to approximately $51,000 per bitcoin after trading near $69,000 just a few weeks ago – a fall of nearly 30%.
Furthermore, a drop of approximately 10% has also been seen in the value of other major cryptocurrencies, like Ethereum, Binance’s BNB, Solana, Cardano, Ripple’s XRP, and more.
After seeing that much drop in the international Crypto market, the majority of the investors have sold off their investments, resulting in a serious decline in the stock market.
In this post, we will try to figure out the reasons behind the fall in Bitcoin and cryptocurrency prices. Additionally, we will also try to find out the causes of the Cryptocurrency market crash. So without making any delay, let’s get started;
Fall In Crypto Market and Bitcoin – The Beginning
First of all, let’s see where it all started. China is known as one of the largest cryptocurrency markets in the world. On 26th November 2021, the Central Bank of China declared that cryptocurrencies are illegal.
Also, the Chinese government has barred financial institutions and payment companies from providing any of the services regarding the exchange of cryptocurrencies.
According to the People’s Bank of China, virtual currency-related business activities are illegal financial activities. Also, the bank said, cryptocurrencies can seriously endanger the safety of people’s assets.
In other words, we can say that China sees cryptocurrency as a volatile, speculative investment at best – and a way to launder money at worst. Along with this, China has also requested all the nations to forbid Bitcoin and other cryptocurrencies.
Dragon has also said that if cryptocurrency is not stopped immediately, it can cause the devaluation of the currency of all the countries in the future.
Some Other Contingencies
After China’s thrilling move, some of the crypto experts said that there have been multiple developments in the global market that could be the cause of the bitcoin price drop.
After China’s crypto-banned announcement, on 27th November 2021, most of the Cryptocurrency investors sold off their digital assets, which caused the crypto market to drop by over 17%.
On 27th November 2021, the cryptocurrencies of $2.4 billion were liquidated, which is the highest devaluation of cryptocurrency since September.
On the same day, the world’s largest cryptocurrency, Bitcoin fell to $47,164.64, and this decline was more than 16% in the last 24 hours. Amidst other cryptocurrencies, Ethereum also followed Bitcoin to plunge by over 15%, dropping as low as $3848.23 in a day.
In-Depth Analysis of the Crypto Market
No doubt, this depreciation of cryptocurrency was the biggest throttle since September 2021. So, there is nothing wrong in saying that it was the largest wipeout in the world cryptocurrency market. During the period, the cryptocurrency of more than $2.4 billion was liquidated.
On 4th December 2021, the overall market cap of crypto plunged to $2.07T, which is more than 17% down from the market cap on December 3, 2021. Now, what do you think it means? Well, it solely means that due to the year of the devaluation of digital assets, investors have been trading to acquire profits or merely exit the market to avoid total loss in case of a crypto refusal or other restrictions.
Possible Factors Behind Crypto Market Crash
Nowadays, one of the most popular questions among cybernauts is why is crypto crashing. Well, there is not a single brick behind the annihilation of cryptocurrency, as there is a possibility of multiple factors that led the crypto market to crash.
First of all, as we all know, the year is about to end and the holiday season is about to begin in most parts of the world. It can be the reason that the investors have liquidated their money in several digital coins to get profit before the Holiday season.
Secondly, the fluctuating view of governments around the world aiming to forbid cryptocurrencies can be the reason creating a state of panic among investors, and maybe that’s why the crypto investors have sold off a maximum of their digital assets.
Another factor that may have an impact on the global cryptocurrency market and the stock market is the arrival of a new variant of the Coronavirus (COVID).
Indian Government Flouting Bitcoin and Other Private Cryptocurrencies
The next big factor in the crypto market crash is the Indian Government. The Indian government has also been opposing Bitcoin and other private cryptocurrencies for some time, it could also be a reason behind the crypto market crash.
These drops in Bitcoin and other cryptocurrencies have been followed by the Central Government’s public statements concerning the banning of individual cryptocurrencies in India.
According to experts, the Indian government is about to pass a bill in regard to Bitcoin and other cryptocurrencies, and it will be known as the ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’.
Also, the Union Finance Minister of the country, Nirmala Sitharaman recently elucidated that the ministry has no plans to acknowledge Bitcoin as an official currency.
We have tried our best to provide you with the maximum information on all the possible conditions that can be behind the crypto market crash. However, experts are still conducting studies to find out the other core reasons behind the world crypto market crash.
Have you invested in Bitcoin or any other cryptocurrency? If yes, what do you think could be the reason behind the crash of the world crypto market? Feel free to share your advice in the comment section given below. Also, if you like the content, subscribe to fetch such exciting information.