Bitcoin, one of the most valuable and commonly held cryptocurrency, recently hit one of its lowest points in several months. The coin saw a record of 9 weeks of unceasing losses. The drop in its value led to a decline in several digital assets, and the repercussions spread across the crypto world. Amidst all the uncertainty, the question that arises is- <strong>Why is crypto crashing? </strong>The start of the <b>Bitcoin bearish</b> plunge can be traced back to March of this year when the Terra announced its decision of buying $10 billion in BTC for its stablecoin reserves. Shortly after, the Federal Reserve tightened its monetary policy and Terra collapsed completely. Terra and its sister token Luna together knocked more than <a href="https://www.livemint.com/market/cryptocurrency/what-does-the-current-crypto-crash-indicate-for-the-future-of-cryptocurrencies-11652588775930.html">$270 billion</a> of the crypto market’s trillion-dollar value. This led to heavy Bitcoin <a href="https://www.cryptoknowmics.com/glossary#volatility-">volatility</a>, and the cryptocurrency fell by nearly 38%.
<h2>What Specifically Triggered The Crypto Crash?</h2>
UST lost its dollar “peg” (the policy of setting a fixed exchange rate for a currency against a foreign one or a basket of currencies) recently, the value sinking to as low as 12 cents. The stablecoin eventually collapsed as investors panicked and sold off their tokens. In addition to this, the general panic over inflation and fear of a potential recession have resulted in equity and crypto markets plunging considerably. Investors everywhere are treating Bitcoin as a “risk-on” asset, and thus amidst rising fear over inflation, many of them have taken a “risk-off” approach, selling crypto in order to minimize monetary risk as much as possible.
<h2>A $1 Trillion Crypto Crash Ensued</h2>
<b>Bitcoin is still bearish</b>, having dropped to lower than $28,000 per coin, at the time of writing. This dragged down several prominent cryptocurrencies such as Ethereum and Solana, the domino effect recording even worse losses across the crypto market. The latter currencies crashed by nearly 35%, and UST’s support coin <a href="https://www.cryptoknowmics.com/news/terras-luna-crashes-down-to-96-from-the-past-24-hours">Luna lost 99% </a>of its value. This recent plummet in the value of stablecoins has led to questioning their so-called stability, as their entire idea and design is based on zero volatility by “pegging” their value to another asset. The crypto world is under immense pressure given the recent tightening of monetary policy, cascading inflation, and other relevant macro events. While the market has slowly been steadying over the past few days, values of various cryptocurrencies climbing up in value again, the loss of over $500 million led to devastating losses to the market.
<h2>So, What's The End Game for Crypto Market?</h2>
After a slow upward crawl in value, the global crypto market cap fell to $1.23 trillion in the last 24 hours, a decrease of nearly 5%, at the time of writing. Bitcoin dropped below the $30,000 mark again, the cryptocurrency still scrambling to regain its earlier relative stability. The Terra project has launched a Luna 2.0 version that’s already live on major exchanges, but investors are wary of the stablecoin as there’s now a massive loss of confidence in the project. This crash’s detrimental ripples will take significant time to subside before the <b>crypto market’s losses </b>are recuperated and it can be declared stable again.

9 Weeks Of Continuous Losses: What Spurred Bitcoin Volatility?

Terra and Luna knocked more than $270 billion off the crypto market’s trillion-dollar value, which led to heavy Bitcoin volatility resulting in a 38% fall.

Vatsala Arora is an Economics major and a freelance crypto writer. She also holds marketing experience and has authored articles for various Web3 startups from across the globe. She's an avid reader and loves traveling, all the while writing content that's informative and easy for readers.

9 Weeks Of Continuous Losses: What Spurred Bitcoin Volatility?

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