Why is crypto down so much? Uncertainty in traditional markets and Fed concerns, experts say
Over the past week, the cryptocurrency market has experienced massive drops, reaching lows not seen in months.
According to CNBC, Bitcoin plunged below $33,000 on Monday, the lowest it’s been since July, and the entire crypto market lost more than $1 trillion in value.
Why has the value of cryptocurrency dropped so much?
Nick Casares, head of product at PolyientX, a platform for NFT projects, said the landscape of crypto was originally decoupled from the traditional economy, but that has changed dramatically.
Cryptocurrency drop: Bitcoin, Ethereum among cryptocurrencies losing value amid investor uncertainty
“This time around, we’ve seen a lot more retail investment,” Casares explains, “We also have institutional money in crypto now that has come in a big way. And when that happens, it tends to create a coupling between traditional markets and the crypto market.”
The Fed met on Wednesday to determine whether or not a rate increase would happen to tackle rising inflation and labor shortages.Stocks fell and Treasury yields climbed with Fed Chair Jerome Powell’s Wednesday announcement that signaled a plan to begin raising interest rates “soon” as the central bank moves to fight inflation.
Includes information from the Associated Press
Michelle Shen is a Money Tech Digital Reporter for USA TODAY. You can reach her @michelle_shen10 on Twitter.