Why is crypto crashing? Bitcoin, Luna and Ethereum price crash explained and what could happen to the market

Cryptocurrency prices have crashed further, with many major coins losing a quarter of their value in a matter of hours.

Bitcoin tumbled below $30,000 on Wednesday – a figure experts considered to be a key level of support.

It fell as low as $25,500 on Thursday morning, its lowest point of 2022, as has recovered slightly to $28,000 as of Thursday afternoon.

It means Bitcoin has lost around 12 per cent on its value in the last 24 hours – comparatively good news when put against other cryptocurrencies.

Ethereum has dropped by 20 per cent, while the likes of XRP, Solana, Cardano, Dogecoin, Shiba Inu and Avalanche have all lost at least 25 per cent of their value.

What are the current crypto prices?

Here are the prices of major coins as of Thursday afternoon:

  • Bitcoin – $28,000
  • Ethereum – $1,930
  • XRP – $0.37
  • Solana – $43.50
  • Cardano – $0.45
  • Dogecoin – $0.077
  • Shiba Inu – $0.000010
  • Litecoin – $60.40

You can find the live prices of cryptocurrencies here.

Why is cryptocurrency crashing?

The general mood around cryptocurrencies has cooled.

Investors appear to be moving away from cryptocurrency and towards less risky investments in the face of global inflation.

Shares in Coinbase, the largest crypto exchange in the US, dropped 15.6 per cent overnight on Tuesday after it posted net losses of $430m (£348m), far worse than analysts were expecting.

Coinbase cited a “trend of both lower crypto asset prices and volatility that began in late 2021”, but was quick to point out that it does not expect these conditions to be “permanent”.

The news has raised questions about whether the market has reached an expected cooling-off period – previously dubbed a “crypto winter” – or a more permanent chill, perhaps a “crypto ice age”.

Simon Peters, crypto market analyst at trading platform eToro, said: “The concern now for cryptoasset investors is when the slide will end.

“The market is caught in the wider adversity of investment markets that are battling to decide where confortable levels are in the wake of interest rate hikes designed to quell soaring inflation around the Western world.”

The crash is also linked to the coin terraUSD (UST) collapsing losing its peg to the dollar, which has also all but wiped out Luna, its support coin.

TerraUSD is what is known as a “stablecoin” – a digital currency pegged to a traditional one.

Yuya Hasegawa, crypto market analyst at Bitbank, wrote in an emailed note seen by Forbes: “Bitcoin continued to slide and closed below $30,000 for the first time since last July, although the fall did not trigger a large sell off and the price is trying to recover $30,000 in the Thursday Tokyo session.

“The price of Bitcoin, however, could still fall due to the UST situation and worsening technical sentiment, but if the US inflation continues to slow down, the macro environment will likely improve and the price will bottom out.”

More from Cryptocurrency

How risky is cryptocurrency?

People invest at their own risk and cryptocurrencies are not regulated by British financial authorities.

All crypto investments are risky, but meme coins like Shiba Inu are particularly volatile, and you should be prepared to lose everything you invest.

The Financial Conduct Authority (FCA) warned in January: “Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money.

“If consumers invest in these types of product, they should be prepared to lose all their money.”

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown previously explained the risks to i.

She said: “On top of being extremely volatile, most cryptocurrencies are unregulated, which not only adds another layer of uncertainty but also means that investors have little or no protection against fraud.”

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