In the end, the collapse of cryptocurrencies came, contrary to those who now saw this alternative investment as a new Eldorado. The correction was significant - $130 billion of capitalization was burned in just one day - and it stunned the thousands of retail investors who by that time had thrown themselves headlong into this new financial instrument.
Defeat figures
Bitcoin, the most famous cryptocurrency, has crashed to $32k and is losing almost 4% today and about 14% in 7 days. The price, which accounts for nearly half of the peaks, has topped $58K and is a far cry from the $100K expected by investors, the value the e-currency was supposed to reach by the end of 2021.
The same fate is with its sister Ethereum, which is down 3.8% today to $2198 and shows a 23% drop in seven days, a far cry from the $4159 reached last year in the most favorable phase of the rally.
Bullying Melania Trump
The fall of the electronic vaute also had notable casualties. An example of this is former Forst Lady Melania Trump, who auctioned off some personal items, including the very famous white Hervé Pierre hat she wore four years ago on an official visit to Paris with her spouse and former President Donald Trump, so also read about MetaMask Vs Coinbase Wallet here: https://cryptodaily.co.uk/2022/08/metamask-vs-coinbase-wallet-which-wallet-is-better.
The charity auction, which included a single form of payment in the Solana cryptocurrency, closed at around $177,000 (1,800 Solana), down 30% from the $250,000 starting price. A total rip-off for a former first lady who literally had to sell her beautiful wide-brimmed hat, sold as a single lot along with a watercolor portrait of Melania by Marc-Antoine Coulomb and a digital version of the same watercolor by NFT.
Here are the reasons for the collapse
A correction is long overdue for an asset that was considered very volatile and risky. The monetary authorities of half the world have warned the financial community and non-specialists about the riskiness of these alternative investments, which are subject to high volatility.
The conditional reasons for the fall of cryptocurrencies are related to the correction of the stock markets associated with a number of factors:
- geopolitical tensions related to the Russian-Ukrainian conflict
- the upcoming Fed rate hike.
Then there are reasons of a more financial and technical nature, most notably the halving, i.e. the reduction in the production of cryptocurrencies, which historically always caused the price to rise for several months before experiencing a vertical collapse. The first halving occurred in 2012, the second in 2016, and the third began in May 2020, when production halved from 12.6 to 6.25 bitcoins every 10 minutes. Each time this operation was performed, the rally continued for about 18 months before the price dropped to levels similar to those from which it began.
From a technical standpoint, there is also what some analysts call a bearish shoulder head, a chart pattern that indicates a clear and unstoppable trend reversal.
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