Why Is the Crypto Market Crumbling Today?

After a brief relief in late October, the general crypto market is in the doldrums again. October saw BTC break the $21,000 mark and ETH break $1,600. However, the rally didn’t last long. At press time, BTC was down 5.4% in 24 hours, trading at $19,707.55, while ETH was down 7.2% in the same period, trading at $1,473.05. In addition, the global crypto market cap fell 5.5% in 24 hours to $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%.

 

Why is the crypto market crumbling ?

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.

 

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