Crypto market crash: Where does the buck stop?

livemint.com:

It’s been mayhem in the world of cryptocurrencies over the past few days. With tumbling equity markets, geo-political tensions and the lingering pandemic creating the perfect storm, it has to be one of the most trying times for investors, and especially for the crypto investors. 

Let us look at the stats. Bitcoin, the world’s largest cryptocurrency, is back to its January 2021 levels at $27,194 (as on May 12, 2022) and has lost over half its value since it hit its peak of $68,990 in November 2021. 

The world's second largest cryptocurrency by market capitalisation, Ether fell by 23% to $1,841.12. Other cryptocurrencies such as XRP have fallen by 34%, Solana is down by 38%, Cardano has tanked 35%, Stellar has fallen by 29%, Avalanche is down by 39%, Polkadot has tanked 32% and Terra USD is down by 27%.

All in all, the global crypto market has lost approximately $830 billion in market capitalisation within six weeks. All of which leaves one question unanswered – where does the buck stop and how many more losses can the investors take? 

Unfortunately, the nature of problems surrounding the crash of crypto coins makes it difficult to predict the correct response to this valid question. Here’s a bitter truth though, there are higher chances of a further fall than there is of a recovery in the crypto market. To know why, here are some problems facing the crypto as well as the global equity market. Notably, it’s difficult to predict when these problems may come to an end to reverse the bloodbath on crypto prices. 

Interest Rate Hikes 

Ever since the US hiked interest rates to contain its highest-ever inflation levels in four decades, global markets have gone berserk. The RBI recently raised rates in India too, with the rupee