Possible Causes of the Crypto Market's Decline

Crypto asset markets have continued to fall this week, plummeting to their lowest levels of the year, but what is driving the bearish price action?

The total value of the cryptocurrency market has dropped to its lowest level in ten months. Over the weekend, another $130 billion left the space, bringing the market cap down to $1.62 trillion. According to CoinGecko, it has not been this low since early August.

BTC, ETH, LUNA, TVK, Etc; led losses again during the Monday morning Asian trading session, which was their lowest since January. Crypto markets are cyclical, but there are a few other factors driving the current selloff, Like;

• The Federal Reserve raised interest rates by half a percentage point last week, prompting a stock market crash. Crypto markets have followed suit, losing more than 10%, or nearly $200 billion, in the last week.

• The year 2021 was extremely bullish for institutional crypto investment, but that trend has not continued into 2022. Tesla, MicroStrategy, El Salvador, and several payment platforms entered the crypto market, fueling the momentum and buying pressure. The first Bitcoin futures exchange-traded funds were allowed to trade in the United States, which was also encouraging. This year has been much more subdued, with institutional crypto fund outflows occurring four weeks in a row, according to CoinShares.

Finally, cryptocurrency markets are cyclical; what rises must fall. Since Bitcoin's inception more than a decade ago, there have been four distinct bull/bear markets. If previous cycles are any guide, crypto markets may remain bearish until the end of the year and into 2023 before turning around.