Top 4 Reasons for Cryptocurrency Market Crashes Since 2021

Ever since the start of 2022, the cryptocurrency market is not off to a good start. The value of Bitcoin has fallen significantly and continues to fall. The cryptocurrency market is volatile, but the recent drop is beyond the market’s volatility. There can be several reasons for the cryptocurrency market crash; let’s take a look at some of the reasons for cryptocurrency market crashes since 2021.

Inflation

Inflation has affected currencies everywhere. One of the biggest pros of cryptocurrencies is their significant immunity against inflation. The economy is highly overheated at the moment, and cryptocurrencies such as Bitcoin have been affected by inflation worldwide. The value has remained low and volatile.

In these times, people had high expectations from cryptocurrencies to outperform all the other currencies, such as dollars. However, inflation has pushed people to take their money from investments such as cryptocurrency and use it for necessities.  

Volatility

People have now started to consider the crypto market as a high-risk investment. This is because they perceive it as technology stocks and think that investing in cryptocurrency is going big or going home. They think they will receive a high reward for their high investment, or it will plummet. This has been the reason for the volatility of the market. Considering the inflation, people are now very hesitant to invest their money in markets such as cryptocurrency without guaranteeing success.

Geopolitical Uncertainty

 What many of us fail to consider is the uncertainty of politics. Geopolitics has a tremendous impact on the crypto market. This is because, during the conflict, people choose to invest their money in more stable and safe options rather than cryptocurrency. This is why the more uncertain political situations are, the more uncertainty in cryptocurrency will increase. Until and unless there is peace between countries, the crypto market will stay volatile. As the market is already unstable, investors will turn a blind eye to cryptocurrency and look for other safer options.

Pandemic

The pandemic has caused great uncertainty worldwide, but it was great for the crypto market. Many people who saved a lot of money had nowhere to spend it but on cryptocurrency. However, the end of a pandemic is not favorable to the crypto market. More and more people are taking their money out of the market. This has caused the market to fall significantly.

These are the top reasons why the cryptocurrency market crashed in 2021 and continues to crash in 2022. If you are considering investing money in cryptocurrency, you must consider the above reasons.