HomeCryptoWhat's the reason for today's crypto crash?

What’s the reason for today’s crypto crash?

Today the overall capitalization of the crypto market slumped to just above $1.2 trillion, while yesterday it was above $1.2 trillion and on 18 April it was above $1.2 trillion as well. 

As can be seen from this data it is actually not a real collapse, but a retracement. 

For example, the price of Bitcoin still yesterday morning was above $30,000, but over the course of the day it fell just above $29,000, and overnight it then fell even as low as $28,600. It later rebounded slightly to $28,900. 

Ethereum’s price yesterday morning was $2,100, then fell to $1,970 during the day, and to $1,920 overnight. It has now rebounded slightly to $1,950. 

However, although this is by no means a crash, but merely a retracement, it may not be over yet. 

The reasons for today’s crypto market crash

There are probably two main reasons behind this retracement. 

The first, trivially, is that over the past few weeks prices had risen a lot, and over the course of the first few months of 2023 they had also risen very fast. 

For example, Bitcoin until yesterday was at +83% since the beginning of the year, so much so that a retracement was possible. Ethereum was at +76%, but its price had risen 12% in just two days after the Shapella update of 12%. 

Since the growth of the crypto market is never linear, a temporary retracement is often triggered after a period of fast and consistent increases, as is happening these days. 

But there is also another reason. 

In fact, Ethereum’s Shapella update has finally unlocked staked ETH after more than two years.

At first, this had not caused a rush of withdrawals, followed by a wave of selling, but this was also due to the fact that not all Ethereum staking pools had enabled withdrawals as early as 13 April. 

Yesterday, for example, Binance, which is the third largest Ethereum staking pool in the world, enabled them, with Lido, which is the main ETH staking pool, enabling them in the first week of May. 

Thus, it is no coincidence that Ethereum’s price is returning to pre-update levels, i.e., those of 11 April, because since the rush of withdrawals was not triggered as soon as Shapella was applied, some believed the danger was averted.

Yesterday, however, the scenario that had been widely predicted for weeks now materialized, except that it happened a week later than expected. 

Key levels to keep in mind

That said, it should be added that the current price levels of Bitcoin and Ethereum are actually of no concern at all, for now. 

It is enough to consider that ETH currently has a price that is higher than even that of 11 April, and in 2023 is lower only than the price touched in the days following the update. 

A similar argument applies to Bitcoin, whose current price is perfectly in line with that of the end of March, lower in 2023 only than the price after 9 April. 

However, one should not forget the fact that the retracement that began yesterday could continue further, especially in view of the opening of withdrawals on Lido. 

Right now, the level to watch for Bitcoin would seem to be the $25,000 level, which is the one that in theory could act as support for possible rises. 

It is important to mention that situation at the top crypto betting sites didn’t change. You can easily visit a bookmaker’s website and place your crypto bet. The main thing is to choose a legal and trusted bookmaker which accepts cryptocurrency as the deposit method.

Already during the past months the fast and consistent rises in Bitcoin’s price have been interspersed with sharp retracements, such as the one on 9 February and especially the one in the first half of March, when it went from $23,700 to $20,300 in just eight days. 

These are not real collapses, but retracements that do not lose even 20% of market value. These are absolutely common and natural dynamics in an always volatile market like cryptocurrencies. 

A rebound expected after today’s crypto crash?

Should the price of Bitcoin fail to fall below $25,000 at this stage, a rebound could be expected later. 

For this hypothetical rebound, the thresholds of attention seem to be three. 

The first, of course, is that of a simple return to $30,000, reached in early April for the first time since May 2022. Such a bounce would not be particularly interesting. 

The second, on the other hand, would already be more interesting, because the comparison with 2019 shows $35,000 by June as a possible target. 

The comparison with 2019 is very interesting, both because so far roughly the two trends have turned out to be in some ways similar, and especially because 2019 was also a rebound year after the post-bubble bear-market of 2018. 

From this point of view, $35,000 is a rather important threshold, because if such a level is not reached before the end of June it would mean that the similarities with 2019 would be over. 

But there is also a third threshold. 

In fact there are several forecasts that converge that during 2023 the price of Bitcoin would have a chance to move even toward $40,000. Not all analysts agree with this prediction, but the average seems to be just that. 

The crypto markets are likely to follow accordingly.

Marco Cavicchioli
Marco Cavicchioli
Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".