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Why Cryptocurrency Is Going Down Today?

Do you want to know why cryptocurrency is going down today? Bitcoin (BTC) and other cryptocurrencies fell to fresh 2022 lows on Monday as investors abandoned risk assets in reaction to stubbornly strong inflation.

To make matters worse, prominent cryptocurrency lender Celsius halted all account withdrawals and transfers on Sunday night, citing “extreme market circumstances.”

BTC was down more than 13% in the previous 24 hours as of mid-morning, with the benchmark cryptocurrency trading around $24,000, its lowest level since December 2020. Ethereum (ETH) prices fell over 16% to less than $1,300, while Litecoin (LTC) and Bitcoin Cash (BCH) prices fell more than 13%.

Bitcoin prices have already fallen by half this year and are trading significantly below their all-time highs of over $69,000 in November 2021.

Celsius In Focus

Celsius, a cryptocurrency lending firm, announced that it would halt all withdrawals, causing a ripple effect in the volatile cryptocurrency market.

The Celsius crash comes on the heels of TerraUSD’s $60 billion meltdown last month. May’s events have heightened legislators’ concerns about the need to regulate the cryptocurrency industry, particularly stablecoins.

Celsius, one of the largest cryptos in the lending space, lent $8 billion to clients in May, with nearly $12 billion in assets under management (AUM).

The cryptocurrency functions similarly to a bank, with higher-than-average interest rates, but without the same level of government regulation.

Celsius halted all withdrawals, swaps, and transfers between accounts on Monday, ostensibly to prevent a “run on a bank.”

“Our ultimate goal is to stabilize liquidity and restore withdrawals, Swap, and transfers across accounts as rapidly as possible,” the business said in a statement. As we explore numerous choices, there will be a lot of work ahead of us; this process will take time, and there may be delays.”

Why Cryptocurrency Is Going Down Today?

Many cryptocurrency investors say that Bitcoin is a digital-era counterpart of gold, a possible flight-to-safety investment, and an inflation hedge.

However, cryptocurrency price behavior implies that the market does not see these extremely volatile assets as stable repositories of wealth during times of economic instability.

According to Brian Price, Commonwealth’s senior vice president of investment management and research, the path of least resistance in risk assets remains negative for the time being.

“The overriding attention remains on inflation, increasing interest rates, and the situation in Ukraine,” Price adds. “The market is now devoid of big positive triggers, so it’s no surprise that we’re starting the week under pressure.”

Investors are looking for refuge from the anticipated negative economic impact of the Fed’s tightening, but not in the cryptocurrency market.

What do You need To Know About Crypto Investing?

Early Bitcoin, Ethereum, and other cryptocurrency investors made a fortune. However, the cryptocurrency market has a lengthy history of significant volatility, which is not what investors want under volatile market conditions.

Throughout its existence, Bitcoin has had multiple steep drops of more than 80%, the most recent of which occurred in 2018.

When Will The Cryptocurrency Craze End?

Bitcoin, like most other cryptocurrencies, is unrelated to tangible or intellectual property and does not create cash flow or pay dividends or interest to investors. Instead, Bitcoin’s price is solely determined by supply and demand, making it difficult to determine its intrinsic worth, according to experts.

Warren Buffett, CEO of Berkshire Hathaway and an investment icon, recently criticized Bitcoin’s inadequacies during a Berkshire annual investor conference, telling investors that he would not pay $25 for “all of the Bitcoin in the world.”

“I don’t know if it will rise or fall in the next year, five years, or ten years.” But one thing I’m certain of is that it doesn’t proliferate or generate anything,” he explained.

Bitcoin and other cryptocurrencies’ volatility and link to other risk assets may ultimately fade. Nonetheless, the recent price behavior in the cryptocurrency market shows that the rocky ride for crypto investors may continue in the short future.

Should You Buy The Dip In Crypto?

Crypto investors should use great care while purchasing the decline.

When asset values fall as quickly as they have in the crypto market in recent days, it might make that coin you’ve been eyeing appear like a steal. However, ancient Wall Street experts have a saying that perfectly captures situations like this: “Never try to catch a falling knife.”

Using your imagination, you should realize that grabbing a falling knife, sometimes known as “buying the dip,” almost invariably ends in agony. That is not to imply that astute investors cannot profit from increased market volatility. However, the point here is that large, rapid market movements can be disturbing for the average retail investor.