2022 starts with an impressive drop in the market and increased volatility
2022 starts with an impressive drop in the market and increased volatility

More than $200 billion leaves the crypto market in one week as high volatility continues. Indeed, the cryptocurrency sector continues to experience increasing volatility, with various assets losing value alongside massive outflows from the general market.

The market plummets as it enters 2022

In the first week of 2022, the market lost about $230 billion, from $2.25 trillion on Dec. 31, 2021, to $1.9 trillion on Jan. 7, 2022, according to data provided by CoinMarketCap.

 

A crash caused by the Fed or whales manipulation?

The steep fall was led by mega-cap tokens like bitcoin and ether. Market analysts have linked the crash to the Federal Reserve's (Fed) mitigating actions amid high inflation.

The crash began in December after the Fed hinted at more decisive measures to combat rising inflation, leading to negative investor sentiment. Some leading cryptocurrencies saw significant support levels breached and a sell-off followed. For example, on Jan. 5, the price of bitcoin fell sharply from $46,000 to about $42,000 in three hours. 

The latest measures taken by the Federal Reserve (Fed) to alleviate high inflation seem to have severely impacted the market. Indeed, the latter is in free fall at the beginning of the year falling to 1.9 trillion dollars yesterday. The most influential crypto-currencies such as bitcoin (BTC) are no exception and are also experiencing a sharp decline. When will the market recover?

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Nathan George

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