Crypto Market Crash: Bull April Suggests No Fear
Are we on the brink of another crypto market crash?
Anyone following Bitcoin clearly remembers the 2017 craze when the strongest cryptocurrency reached a record of almost $20,000.
Sure, it was a fruitful year for most ICOs and wannabe entrepreneurs who wanted to get rich in no time. However, as it usually happens, the ICO bubble had to pop. At the beginning of 2018, the crypto market crash became inevitable.
In 2019, the CEO of Facebook, Mark Zuckerberg, announced that the biggest social network would enter the crypto space with its own project called Libra. Even though the idea sounded lucrative, many big names started backing out as the US Congress expressed concerns about the lack of regulation within the sector. The price of Bitcoin then went down by more than 30%, below $10,000, followed by other cryptocurrencies. Analysts called it "a period of indecision," and investors hoped that Facebook's entry would bring greater legitimacy to the cryptospace. Even though Facebook changed its name to Meta at the beginning of 2022, it doesn’t seem the social network affected crypto prices during the period to come.
Fear of a Crypto Market Crash
Price changes usually depend on other circumstances such as recession, inflation, the geopolitical situation, pandemics, US regulatory actions, and so on. In 2020, Bitcoin jumped to a new record, following the government's stimulus packages to boost countries' economies during the COVID-19 pandemic.
Despite Bitcoin being on its way to becoming a hedge against inflation, it still isn't seen as a safe haven such as real estate or gold. That is why we are witnessing the price of Bitcoin moving along with the US dollar and the overall stock market. We have often witnessed a situation when new short-term investors start to panic and decide to sell their holdings and, therefore, contribute to the drop in Bitcoin’s value. On the other hand, a crypto market crash can happen when so-called "whales" are involved. Holders with a significant amount of Bitcoin can temporarily affect Bitcoin's price if they make large buyings or sales.
Crypto Market Crash Inevitable?
2022 started badly for Bitcoin and other cryptos even though the number one cryptocurrency was still 500% up since the end of 2019, primarily thanks to the US Government's COVID-19 stimulus.
The total market cap plunged by more than $300 million since the beginning of the year. This was chiefly due to record inflation and the Russia-Ukraine conflict, leading many investors to worry that a crypto market crash may be inevitable. At the time of writing, Bitcoin stood at around $46,115 and headed towards a traditionally bullish April. The data shows that during the last six years, April was an extremely good month for crypto, as some speculate it's a psychological paradox connected to the spring optimism.
However, a seasonally bullish April could turn positive for Bitcoin even in the long term, together with stock markets. The first all-spring month means most of the winter debts have been paid off, and buyers are in the mood to buy on a decline.
Still, there is a reason why a crypto market crash could soon be happening. US investors started to pull out of crypto, liquidating over $101 million worth of Bitcoin and approximately $151 million from Ethereum.
Author: Teuta Franjkovic
A sincere writer with a strong will to share knowledge on all things blockchain, crypto, metaverse and DeFi. Starting out as a writer with Cosmopolitan, Teuta has risen through the ranks of business journalism, editing newspapers and websites within the fintech industry for over 15 years. She holds a double MA in Public Politics and Entrepreneurship.