![\"Indicators](\"https://wp-api.zipmex.com/wp-content/uploads/2022/04/crypto-crash-indicators.png\")
In early 2022, Bitcoin, Ethereum, and other cryptocurrencies dropped by more than 10%. As a result, it cut cryptocurrency’s total market cap by 205 billion USD. Some investors began to worry that this drop might indicate a possible crypto market crash in 2022.
\n\n\n\nIf that’s true, what are actually the signs of a crypto crash? Also, what should we do if it occurs? When would Bitcoin and other popular cryptocurrencies face a crypto price crash? What are the differences between crypto crash and correction? Find out the answers below.
\n\n\n\nIn January 2022, Bitcoin, Ethereum, and other major cryptocurrencies went into a free fall. As mentioned by Fool, CoinMarketCap data showed cryptocurrency’s total market cap has dropped by more than 300 million USD since January 1st, 2022. The drop was heavily linked to the high inflation record and Russia’s invasion against Ukraine.
\n\n\n\nSome popular cryptocurrencies, including Bitcoin and Ethereum, even lost 9% and 20% of their respective values. Since it also affected most cryptocurrencies, investors began to worry about a possible crypto crash today in 2022.
\n\n\n\nSome experts also link the crypto market crash in 2022 to uncertainty caused by the new Covid-19 variant. It casted doubt among retail cryptocurrency investors on whether to buy more assets at a lower price (buy the dip) or sell them to avoid further loss.
\n\n\n\nPeter Johnson, a Jump Crypto partner, and DeFi Alliance co-founder, as reported by Yahoo!Finance, mentioned that Bitcoin today is a risky asset. Even so, he also believed a positive catalyst would boost cryptocurrency price in 2022.
\n\n\n\nAccording to him, macro inflation is actually a good sign for Bitcoin. Billions of dollars that can be used as crypto hedge capital might help in gaining a positive trend in the crypto market.
\n\n\n\nCryptocurrencies certainly dropped earlier this year, but it is not the first time we have seen it happen. The same market once dropped by more than 52% between May and the end of July 2021. Then, in November 2021, the market also drops by 38%.
\n\n\n\nDespite its high volatility, these multiple crashes appear to change investors’ actions as they began to respond to the market slower than usual. Their act eventually helped build a more stable market.
\n\n\n\nTo answer the question of ‘Will crypto crash?’ there are two possible signs of the crypto market crash, according to Fool.
\n\n\n\nRecent crypto market volatility has shocked many investors. Even though the price has recovered in the last 7 days, Manfred Hubner, Sentix acting director, a behavioral analysis company, mentioned that the lack of customer’s trust in the asset is bad news for the whole market as investors would restrain themselves from purchasing the middle-term investment.
\n\n\n\nHe also added strong evidence of increasing public interest in cryptocurrency. Thanks to better access to advanced technologies, more people are becoming more familiar with cryptocurrency, even in Africa.
\n\n\n\nAccording to Hubner, it would help short-term recovery for assets like Bitcoin. However, Hubner also warned that the market is still susceptible to short-term setbacks due to decreasing customer sentiment.
\n\n\n\nAnother sign of the crypto market crash is digital asset price’s negative movement.
\n\n\n\nIn the last two weeks, investors have been liquidating more than USD101 billion from the market. For example, North American investors once withdrew their 47 million USD asset, according to CoinShares.
\n\n\n\nOther investors then followed this trend when they sold popular cryptocurrencies, such as Bitcoin, Ethereum, and other assets.
\n\n\n\nMeanwhile, other investors chose to take action on Ethereum. Investors have been pulling their money away from Ethereum for more than 151 million USD in the last four months. This number represents more than 1.2% asset under Ethereum management.
\n\n\n\nBefore getting further on crypto crash history, let’s learn more about several things that may cause the price to fall.
\n\n\n\n![\"In](\"https://wp-api.zipmex.com/wp-content/uploads/2022/04/bitcoin-crash-min-1024x570.png\")
In early January, the BTC leverage ratio, as recorded by a crypto data company, CryptoQuant, reached its all-time high. It indicates investors took a greater risk in the crypto market.
\n\n\n\nLike in a traditional market, crypto investors often use debt to fund their future purchases. This action then forces miners to hedge their assets to prevent future price drops over their mined assets.
\n\n\n\nSimon Peters, an eToro senior account manager, said that leverage could cause short-term volatility for cryptocurrency. However, he also mentioned that falling crypto price might cause long-term liquidation, which may end up in huge price drop in the market.
\n\n\n\nCrypto market is very susceptible to leverage investors who liquidate most of their assets. By doing this, they bring turbulence to the market.
\n\n\n\nUnlike the stock market, crypto market doesn’t have buyers waiting to purchase large amounts of coins. Most crypto crashes usually occur during weekends because fewer investors are willing to buy assets while most investors will opt to sell.
\n\n\n\nA crypto crash can also be caused by blockchain and network security matters. For example, a new regulation from government institutions may disturb the market and stir fear among investors to purchase and invest in cryptocurrency.
\n\n\n\nSecurity also matters. For instance, fewer miners would be working on a Bitcoin network if they found a lack of security. A hash rate would occur, and the Bitcoin price is affected.
\n\n\n\nPublic sentiment also affects cryptocurrency. Experts warn that a public figure’s or influencer’s statement may also affect the price of a particular cryptocurrency.
\n\n\n\nOne easy example is how Elon Musk’s tweet affected Dogecoin and Bitcoin price. By simply tweeting on his official account, the price of both cryptocurrencies fluctuated instantly. Such examples create a phenomenon known as the crypto bubble.
\n\n\n\nFact reveals that the crypto crash once occurred in 2020 and 2021. Here is a brief summary of the crypto crash history from 2020 to 2021.
\n\n\n\nIn 2020, many cryptocurrencies experienced significant price cuts. Bitcoin is one of them. At that moment, Bitcoin lost half of its price within only two days.
\n\n\n\nSo far, 2021 is the best and most destructive year for cryptocurrency. In April, Bitcoin reached its ATH at 64,000 USD.
\n\n\n\nUnfortunately, that surge didn’t last long. The price went down after Elon Musk tweeted that his company would no longer support payment via Bitcoin due to environmental issues linked to the coin mining.
\n\n\n\nMusk’s tweet later sparked an issue on Bitcoin mining. Moments later, China government began its harsh actions toward cryptocurrencies, causing crashes among some popular cryptocurrencies. China has also forbidden all banks and financial institutions from offering any cryptocurrency service.
\n\n\n\nIt’s very normal for an investor to fall into panic selling or buying when the crypto crash occurs. No one wants to lose their asset value easily, not even investors. Investors would not hesitate to sell their assets even though the price drops to protect the asset and prevent further loss. You should, however, avoid putting yourself in this trap.
\n\n\n\nInstead, you should hold your assets as their price might rally after the crash. You won’t benefit from this price hike if you have already sold your asset.
\n\n\n\nIn case of panic buying, you might think that the current price drop is the best moment to buy the dip. However, we advise not to act hastily.
\n\n\n\nLook at the market and do thorough research on each cryptocurrency. Usually, during an uncertain period like this, many investors and traders become irrational and make hasty decisions. In cryptocurrency, things like these surely bring disaster.
\n\n\n\nWhether it is a stock or crypto market, devaluation is normal.
\n\n\n\nBitcoin has lost half of its value several times after its launch. However, its value also increases nearly every year.
\n\n\n\nTake a look at Bitcoin and other cryptocurrencies’ price charts to understand cryptocurrency price movement.
\n\n\n\n![\"Don’t](\"https://wp-api.zipmex.com/wp-content/uploads/2022/04/Crypto-crash-solutions.jpg\")
Once you evaluate every market detail, you can decide your next step. Remember, a buy & hold investment strategy is often the best way to build long-term profit.
\n\n\n\nThe key is to make the right decision at the right time. Avoid panic buying or selling because they often lead to regret.
\n\n\n\nNo one can ban you from selling or buying assets when the crypto crash occurs. However, it would be wise to get as much information as possible about the asset and don’t hesitate to consult with someone with better expertise before deciding to buy or sell your asset when the market is not in its best shape.
\n\n\n\nDo not sell your asset at its lowest point, and don’t buy at the highest one.
\n\n\n\nMany people often think crypto crash and correction are the same things. Here are some of their differences.
\n\n\n\nIn traditional finance, a crypto crash is widely defined as a price drop by more than 10% in a day. This condition is often triggered by a sudden change that affects the crypto market.
\n\n\n\nSeveral technical aspects may cause a crypto crash. Macroeconomy, major company announcements, and sudden changes in regulation as well as international policy.
\n\n\n\nMeanwhile, a crypto correction is a rapid price drop in the market by 10% over an asset for a few days after hitting its highest point.
\n\n\n\nUsually, a crypto correction would be followed by a recovery. However, a cryptocurrency may also continue to a longer drop, known as bear market if the price drops by 20% or even more.
\n\n\n\nIt is best to stay updated and informed about the latest price predictions, trends, and crypto tools to help you invest in the crypto world.
\n\n\n\n\n","excerpt":"Learn about the crypto crash indicators and factors to avoid getting trapped in the crash. And find out what to do if you are in the crash!
\n","date":"April 25, 2022","featuredImage":{"node":{"caption":"Crypto-Crash
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