Why are the Crypto Markets Crashing Today?

Paigambar Mohan Raj
Source: Coingape

After a momentary relief in later October, the general crypto markets have once again entered a slump. October witnessed Bitcoin (BTC) crossing the $21k mark, and Ethereum going over $1600. However, the rally did not last very long. At press time, BTC had fallen 5.4% in 24-hours, trading at $19,707.55, while ETH fell by 7.2% in the same time frame, trading at $1,473.05. Additionally, the global cryptocurrency market cap fell by 5.5% in 24-hours, standing at $1.02 trillion.

Volatility is one of the downsides of the crypto industry, however, 2022 has been one of the worst years for the sector. Nonetheless, the S&P 500 is up by 0.96%, and NASDAQ is up by 0.85%.

This begs the question…

Why are the crypto markets falling?

This week sure is full of volatile events. Firstly, the Binance-FTX situation caught the community by surprise. Binance CEO, Changpeng Zhao (CZ), announced that the exchange would liquidate its FTT (FTX’s native token) holdings after “recent revelations.” The news caused panic among investors, leading to FTT falling by 28.3% in the last 24-hours. The development put a thorn on an already volatile week ahead.

Apart from the “war of exchanges,” the U.S. mid-term elections are scheduled for today, November 8th. Elections usually bring forth some volatility in the markets, specially risky assets such as crypto. Rising cost of living, and high inflation are likely to be the center of political discussions.

If that was not enough, the U.S. Federal Reserve is all set to release its October inflation data on November 10th. Analysts expect inflation to come in at 7.9%, 0.3% lower than the number in September. A lower result could be a boon for the crypto industry, but a higher output could lead to more volatility. Nonetheless, investors are at the edge of their seats.

Thus, the above three situations have most likely played a hand in investor sentiment, and consequently in the current market slump. But how the market will pan out, is yet to be seen.