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Highlights
- On Monday, September 20, the crypto selloff was witnessed by traders and crypto enthusiasts.
- The decline in prices of cryptocurrencies has left people wondering why the crypto market is crashing.
- Bitcoin and Ether recorded a massive decline on September 20. Also, alternative cryptocurrencies experienced a significant decline.
Cryptocurrency prices declined heavily on Monday, September 20, after weakening for the last two days as volatility increased in the market. Most virtual currencies experienced a more pronounced decline in their prices in the last 24 hours.
Bitcoin declined by seven per cent and the second-largest cryptocurrency, Ether, recorded a dip of eight per cent (as of 10AM EST), according to the data from Coindesk. In addition, alternative cryptocurrencies like Cardano, XRP and Polkadot also fell sharply as the entire market traded in red.
The significant decline could be due to multiple reasons. Here, we have shortlisted a few reasons that may have contributed to the fall of almost all the cryptocurrencies.
Evergrande collapse affects crypto prices
Chinese property giant Evergrande's fall could have triggered a sell-off. The traders are fearing that the real estate giant's debt crunch would hurt other asset classes.
After a moderately bullish momentum last week, the cryptocurrency market has taken a sharp turn and the total market capitalization has reportedly declined below the US$ 2 trillion mark.
Not only the crypto market but the traditional stock market is also expected to take a hit due to Evergrande's collapse. At the moment, the real estate company is the world's most indebted developer and owes more than US$ 300 billion.
Chinese authorities have warned that Evergrande is not in a position to pay the debts and that could be giving rise to a bearish sentiment across the world.
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South Korea's crackdown on cryptocurrency exchanges
South Korea has made stringent new rules for cryptocurrency exchanges, and it is expected that the majority of them would shut down as they won't be able to comply with the new rules. According to reports, about 35 of 63 cryptocurrency exchanges could shut down as only 28 companies have received certification from Korea Internet and Security Agency (KISA).
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The stringent rules were imposed as it was alleged that some crypto exchanges were engaging in tax evasion and money laundering. In addition, the government is also planning to impose a crypto capital gain tax.
Speculations over US Federal Reserve meeting
Ahead of this week's US Federal Reserve meeting, there are speculations that the government could declare stablecoins as a risk to the country's existing financial system. As a result, these rumours are triggering a sell-off.
In addition, the US Infrastructure Bill deadline is nearing and that may also be affecting the cryptocurrency market negatively.
Bottom line
The cryptocurrency market is infamous for its volatility and any major developments around the world significantly affect the market. Since all the above-mentioned factors are not in favour of virtual currencies, the market sentiment has turned bearish and as a result, we are seeing a decline in almost all the major cryptocurrencies.
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