The crypto market has had a very difficult week so far, with is seeing massive sell-offs across the board. These sell-offs can be attributed to different reasons, but they all came together to cause the massive plunge we saw yesterday.
In just yesterdays trading alone, we saw the biggest coins BTC and ETH down more than -8% and -7% in what seemed to be some kind of panic selling.
In this article, we will be exploring the reasons behind this sharp price drop and what it might mean for the crypto market.
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- Bearish Investors Sentiment:
The first reason for this sharp drop in prices is the bearish investors’ sentiment currently affecting various asset classes in the financial industry. For the crypto market, this bearish sentiment is even more prevalent as the industry is going through multiple lawsuits, sanctions, big players failing, and the SEC crackdown.
We are also seeing massive interest rate hikes that is pulling out liquidity from the market. How the crypto market handles all these challenges will affect the future of this industry.
- Mt Gox Massive Payout:
One of the earliest crypto exchanges Mt. Gox was a bitcoin exchange based in Shibuya, Tokyo, Japan. It was Launched in 2010, and at its peak, it was handling over 70% of all bitcoin transactions worldwide.
It held on to that top spot until early 2014 when it abruptly ceased operations, claiming it was hacked and some of its client’s funds had been stolen.
Since then we have seen its assets seized and numerous lawsuits filed against the exchange. Now, the court has ordered the payout of an Estimated $3,080,678,698 in Bitcoin (BTC) to the affected victims starting this Friday (10th of march 2023).
This quantity of BTC released back into the market after over 10 years of it being seized and in cold storage can move the market substantially to the downside.
- President Biden’s 30% Crypto Electricity Tax:
President Biden’s just-released budget proposal includes a new phased-in 30% tax on the electricity used in cryptocurrency mining.
This would substantially increase the already high cost of crypto mining and will have a negative ripple effect on the entire industry!
According to the white house correspondent, the new tax was phased in because of the high energy requirement of crypto mining, hindering the transition to a low-emission energy future.
If you have no idea what crypto mining is or how important it is, check out this article Bitcoin Halving Countdown – Next Bitcoin Halving Dates
- Silvergate Bank Crash:
One of the biggest nails in the coffin that caused this Crypto Market Plunge was the Silvergate bank crash. The Silvergate Bank is the number one goto crypto-friendly bank in the U.S. This bank is used by various crypto exchanges to carry out their transactions and store fiat.
Its sudden collapse caught the crypto industry off guard and might have been one of the major reasons for the panicked sell-off.
For a full breakdown of how important this bank was and what it means for the crypto market check out this article Silvergate Bank’s Collapse Causes BTC’s Price to Plunge
What Now For The Market?
This sell-off was very aggressive, moved very fast, and is unsustainable. So we believe sooner or later, this bearish volume will dry up and we will see prices begin to bounce and push back up across the board.
Check out our Price Prediction page for the latest daily technical analysis on Bitcoin and Ethereum to find out exactly when that bounce might occur and the possible targets to watch out for.
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