Bitcoin, one of the most valuable and commonly held cryptocurrency, recently hit one of its lowest points in several months. The coin saw a record of 9 weeks of unceasing losses. The drop in its value led to a decline in several digital assets, and the repercussions spread across the crypto world. Amidst all the uncertainty, the question that arises is- Why is crypto crashing? The start of the Bitcoin bearish plunge can be traced back to March of this year when the Terra announced its decision of buying $10 billion in BTC for its stablecoin reserves. Shortly after, the Federal Reserve tightened its monetary policy and Terra collapsed completely. Terra and its sister token Luna together knocked more than $270 billion of the crypto market’s trillion-dollar value. This led to heavy Bitcoin volatility, and the cryptocurrency fell by nearly 38%. What Specifically Triggered The Crypto Crash? UST lost its dollar “peg” (the policy of setting a fixed exchange rate for a currency against a foreign one or a basket of currencies) recently, the value sinking to as low as 12 cents. The stablecoin eventually collapsed as investors panicked and sold off their tokens. In addition to this, the general panic over inflation and fear of a potential recession have resulted in equity and crypto markets plunging considerably. Investors everywhere are treating Bitcoin as a “risk-on” asset, and thus amidst rising fear over inflation, many of them have ...
