The crypto market has crashed hard in recent days. The massive sell-off caused the Bitcoin price to drop to its lowest price in 18 months.
Crypto carnage is bad news for the stock market
Crypto investors are very anxious, but it is not only people who own crypto coins who should fear a collapse of the crypto market. The crash of the crypto market could have major consequences for the stock market, various experts warn. The ongoing carnage could result in more selling pressure in the stock market.
This is what crashed the crypto market
Bitcoin’s price fell nearly 20 percent on Monday to a low of $21,000. That is the lowest level since December 2020. The huge price drop took place after the crypto bank ‘Celsius’ stopped recording due to extreme market conditions. The CEL token crashed by more than 50 percent in one day.
In addition, crypto exchange Binance was forced to suspend Bitcoin withdrawals for a while due to a backlog problem. This caused additional fear among crypto investors. News also emerged that more and more crypto companies are having to lay off staff due to the poor market conditions. For example, the crypto company BlockFi announced it would have to lay off 20% of its staff.
Crypto market collapse is a sign of risk-averse sentiment
Experts say the crypto market collapse is a sign of risk-averse sentiment in the financial markets. Investors are fleeing to safer investments because of rising interest rates and fears of a recession.
“Bitcoin has been a good measure of investors’ risk threshold for stocks, and the recent drop in price could only mean more bad news for the broader stock market.”
– JC O’Hara, from MKM Partners
According to many analysts, the chance of a Bitcoin price drop below $20,000 is a serious possibility. Breaking this psychological barrier would be a very bad sign for both the crypto market and the stock market.
