The 2022 Crypto Crash: Bitcoin Collapses to $33,500 and the ‘Extreme Fear’ Has Gripped the Crypto Market
As we are all HODLing the financial markets have seen better days. The crypto market, in particular, has reached what some say is the ‘2022 Crypto Crash’, but what exactly caused this crash and what could traders do at NAGAX in reaction to it?
The US Fed’s Interest Rate Hike Decision
Last week, the US Federal Reserve Bank raised interest rates a half a percentage point. A bold decision was made by the Fed as Jerome Powell calms fears as an act to try to tame high inflation. On the other hand, the interest rate hike has created tensions among the public on the fear and greed index as well as the financial markets.
After rising slightly a day after the announcement, the crash came with tech stocks and as it usually does, Bitcoin continues to mirror the reactive movements.
As the public is swallowing their sorrows as it reaches the pockets of many Americans, the Crypto Market is now starting to react to the negative news. Let’s get into it.
The Crypto Market
The newest market has left traders HODLing for dear life as the Crypto Fear and Greed Index is at extremes today. The total market cap has tanked to a 10-month low of nearly $1.6T. According to trusted crypto sources, the crypto market has not reached this low since early August of 2021.
In fact, the digital asset market shredded more than 10% over the past few days amounting to nearly $200 billion.
Where does Bitcoin stand?
It seems that it is enough just to push Bitcoin, and it could go into a protracted dive.
Extreme fear is the main reason for Bitcoin crashing to a jaw-dropping $35K.
‘The American economy needs to be rehabilitated’ it’s the phrase we’ve been hearing for decades. Despite the obvious facts, when it is necessary to focus on the return of public debt, the FED not only did not take any measures to stabilize but also actively prints new dollars. Well, 2020 was a record year, when 30% of the entire dollar issue was drawn. For any other country, this would have turned into a collapse, but in the United States, they were sure that they could continue to calmly consume the benefits of civilization, while most of the planet would receive a powerful blow to its economy.
As massive inflation in 2021 has become apparent, modest steps are being taken to address pressing issues. In the first four months, the key rate rose to 1% which is too in this situation, but white-collar workers are confident in the correctness of the chosen course. As it turned out, even this is enough for the appearance of panic on the American stock exchanges. Indices are falling, and Bitcoin is chosen as the first ‘whipping boy’.
On May 4, Bitcoin was trading at $40,000, and at that time, we heard a lot of optimistic forecasts. However, the situation is such that on the morning of May 9, the price of the first cryptocurrency fell below $34,000 and was fixed at around $33,500.
Some of the experts remembered the existence of crypto winter, while others claim that it is already here, and everything that happens is a groping for the bottom, after which there might be a powerful rebound.
Today experts state that the so-called Fear and Greed Index is at the extreme fear mark. To clarify, when investors and common holders are confident in Bitcoin’s bright future, the value goes into the green zone, but today we have a maximum red bar. Analysts believe that a big collapse is on the horizon, because the more Bitcoin loses, the less confidence in it, which means the breaking point might be near.
So far, the situation is on a dangerous plane, but the Whales have all the tools for a small reversal. Well, what will actually happen, we will find out in the next few days.
As you can see, the entire market is falling, not just Bitcoin. Note the weekly collapse:
Most of the cryptocurrencies from the top 10 rankings, lost more than 10% and some lost a quarter of their value.
According to some experienced crypto analysts Bitcoin, as a reaction to the global economic landscape, shows the possibility of even falling to the mid $20K price range this year. If traders know, the crypto markets remain cyclical to a bull/bear cycle; what goes up, must come down. There have been four distinct cycles of Bitcoin throughout its history. After evaluating the cycles analysts predict that the remainder of 2022 and potentially 2023 could remain bearish for the OG Bitcoin.
Cryptos at NAGAX
As many say, “buy low, sell high”, traders could consider this Crypto Crash as opportunities in the digital asset realm. Traders should always proceed with caution and acknowledge the risks of the market, but with that said, could also acknowledge the potential to build a trading strategy around this.
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