What factors led to the crypto crash? All the details regarding what is happening in the market

Crypto crash: what is happening in the market? What are the motivations behind the price swings? Could it be just the result of the bursting of the virtual currency bubble or is there more to it? 

Let’s take a look below at some of the potential reasons that can be attributed to price uncertainty in the blockchain industry, and in particular, look at the situation of Bitcoin today.

Crypto crash: inflation, economic uncertainty, and interest rates

As anticipated, many attribute the crypto crash to the bursting of the speculative bubble in virtual currencies, a theory advanced repeatedly by economists and financial brokers. 

However, at present it is difficult to have absolute certainty about this hypothesis.

As we know, cryptocurrencies are known for their high volatility and tendency to fluctuate greatly in price, characteristics that have led to the success of many investors. 

In any case, the recent market downturn in recent months represents a truly exceptional and extraordinary event. So, what is really going on? 

We can say that, among the different factors that have contributed to the general collapse of cryptocurrencies, among the most significant ones we can mention inflation.

Indeed, rising inflation has been reported as one of the main contributors to the collapse of cryptocurrencies. 

As a result, many investors have massively sold their cryptocurrencies, driving down the value of Bitcoin and many other digital currencies. There is also a great deal of uncertainty in the global economic situation. 

It is worth noting that this phenomenon is also common to other speculative assets, but the volatility inherent in cryptocurrencies has amplified the negative effect. Finally, the recent rise in interest rates is part of the cause. 

As we know, there has been the announcement of interest rate increases by major central banks, such as the US Federal Reserve and the European Central Bank (ECB). 

These decisions have raised concerns about the future prospects of the market and contributed to the massive selling of cryptocurrencies.

Focus on Bitcoin’s trend: holding steady at $26,000

Bitcoin maintains its current stability at $26,000, while recent macroeconomic data from the United States does not seem to have a significant impact on cryptocurrency markets. 

In fact, according to TradingView, the BTC/USD pair remains relatively stable despite new data on the Producer Price Index (PPI), which indicate a further slowdown in US inflation.

In fact, the following is noted in a tweet yesterday from Decentrader: 

Following the release of the Consumer Price Index (CPI) the previous day, the currency pair failed to provide volatile movements to traders, staying within a known range between several moving averages. 

Therefore, market participants are waiting for the Federal Reserve’s upcoming decision on interest rates and subsequent comments from Chairman Jerome Powell, hoping that these will provide meaningful insights. 

In addition to the rate decision, there is debate among Bitcoin analysts regarding the strength of the US dollar, with Crypto Ed noting the possibility of a rebound from support that could affect BTC/USD.

How much has the SEC’s attack on major crypto exchanges affected market performance?

As is known, on 6 June, the SEC filed an emergency motion seeking a temporary restraining order against Binance.US, alleging that Binance CEO Changpeng “CZ” Zhao had access to Binance.US customer funds.

According to the regulator, Zhao allegedly moved $12 billion of Binance funds through an entity he controlled called Merit Peak. 

However, in a joint memorandum filed 12 June, prior to the hearing on the restraining order, both Binance.US and Zhao categorically denied the allegations regarding misuse of funds. 

They also criticized the SEC claiming that the agency was unable to identify even a single instance in which Binance.US customers’ funds were misused.

However, despite the fact that Binance.US seems to know how to defend itself, it is undeniable that this has reflected somewhat negatively on the overall situation in the crypto market. 

As things stand, Binance.US and the US Securities and Exchange Commission (SEC) have reached an agreement to work together to avoid a freeze on all of the exchange’s assets. 

According to a Bloomberg report published yesterday, US District Judge Amy Berman Jackson directed the two organizations to use a magistrate judge to work on a compromise agreement. 

The goal of the agreement is to protect customers’ funds without having to shut down the exchange.