Cryptocurrency prices fell again on Tuesday evening, with several coins down 8% in the past 24 hours.
Bitcoin fell from $20,000 to under $19,000, while Ethereum dropped to around $1,500 after rising nearly $1,670.
Prices are falling everywhere. XRP fell 4% to $0.32, Cardano fell 7.5% to $0.46, while Binance Coin, Solana, and Dogecoin suffered similar losses.
This comes amid the collapse of the Ethereum network, which has been cited as one of the most important moments in the history of cryptocurrencies.
Here’s what we know about the latest crypto crash, why the crash of Ethereum is so important, and what experts think could happen next.
Why did the cryptocurrency collapse?
The cryptocurrency is heavily influenced by the traditional stock market, which also fell on Tuesday.
The S&P 500 fell 0.4% and the NASDAQ 100 fell 0.7%.
The stock market crash came in response to fears that the Federal Reserve will continue trying to curb inflation as the dollar hit a 20-year high.
The fall in cryptocurrency prices came after a 10-day period when Bitcoin traded at around $20,000.
Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital, told CoinDesk: price. »
What is an Ethereum merger?
The Ethereum merger will split the Ethereum network into smaller chunks of data to make it more efficient and significantly greener. It will merge the Ethereum mainnet with the Beacon chain.
This will change the network from proof of work to proof of stake. This means that instead of traditional mining, which requires powerful computers to solve mathematical puzzles to manage the network and create new coins, there will now be a system where ETH holders can use to power the network.
According to the Ethereum Foundation, after the merger, the power consumption of Ethereum will decrease by 99.95%.
What are the predictions of cryptocurrency experts?
Experts paint a disturbing picture for bitcoin investors.
Naeem Aslam, an analyst at brokerage AveTrade, told Barrons: “Bitcoin’s daily range has narrowed a lot and this indicates that a massive capitulation is ahead.
“We believe this capitulation could happen any day now as Bitcoin has been trading in a tight range for a long time. »
Crypto researcher Kyle MacDonald told Coindesk that the Ethereum merger could have a negative impact on Bitcoin.
I think that after the merger, investors and regulators will realize that proof of work was never really necessary, and we will gradually see a huge collapse in the price of bitcoin,” he said.
“Bitcoin will never hit $69,000 again; this is the perfect time to sell all your bitcoins.
Ethereum could become the new market leader if the merger is successful, but investors are anxious to see how it develops.
Dr. Anna Becker, CEO of algorithmic crypto investment platform EndoTech, told the Evening Standard: “If this happens and all goes well, we will enter a new era and it is extremely exciting for all the industry. But, as with many other projects, there may be times when we run into obstacles and things don’t go the way we hoped.
“Ethereum is the infrastructure for many companies to run their blockchains, so if something goes wrong, we will close the industry… it will be quite difficult for the industry to survive this period. »
She added: “Ethereum is the new hope of the market, so we expect it to become the leading index and the leading coin in the market.
“Cryptocurrency can become an everyday currency, and then it will become extremely widespread. »
How risky is cryptocurrency?
People invest at their own risk and cryptocurrencies are not regulated by the UK financial authorities.
All crypto investments come with risk, but coins like the Shiba Inu are especially volatile and you should be prepared to lose everything you invest.
In January, the Financial Conduct Authority warned: “Investing in crypto assets, or investments and loans associated with them, usually carries very high risks to investors’ money.
“If consumers invest in these types of products, they must be prepared to lose all their money. »
Suzanne Streeter, senior investment and markets analyst at Hargreaves Lansdown, previously explained je risks.
She said: “In addition to extreme volatility, most cryptocurrencies are unregulated, which not only adds another layer of uncertainty, but also means that investors have little to no protection against fraud. »