Crypto Crash: Bitcoin Fell Below 6%, Ethereum Down 10%
It's more bad news for crypto, but what's to blame for the ongoing falls in value?
Early Monday morning, Investing.com tweeted some sobering news for the crypto community: Bitcoin had fallen below $19,000 to $18,802.1, marking a further decline from its "psychological threshold" of $20,000.
And Bitcoin wasn't alone in its losses.
Ethereum's native token, Ether, dropped even more: showing a drop slightly above 10% and trading at $1,303.42.
What could be causing the drop?
As the Fed continues its efforts to tame inflation by raising interest rates, investors have pulled back across the board, and crypto is no exception. While the economy remains uncertain, individuals are avoiding risky assets.
Additionally, Ethereum's long-awaited "Merge" was completed last week, making it a proof-of-stake blockchain instead of a proof-of-work blockchain.
What does that mean? Essentially, proof-of-work is done through mining, whereas proof-of-stake is done through existing owners putting their coins at risk (or stake) to validate transactions in the blockchain. The biggest win for The Merge is that it's better for the environment — it uses significantly less energy than proof-of-work transactions.
However, there's a caveat. With news of The Merge, comments made by Securities and Exchange Commission chairman Gary Gensler to The Wall Street Journal suggest that the currencies allowing holders to validate coins through stakes would classify them as a security, which would mean they are required to be under regulation by the SEC. This is a reality that many crypto investors are wary of, as the nature of the currency is rooted outside of government regulations.Monday, Bitcoin had already risen above its threatening $18,802 and is trading around $19,210.
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