The crypto market is having a no good, very bad week.
This week’s crash brings a sudden reversal after weeks of relative stability for bitcoin and ethereum prices. Both tokens are now down more than 18% over the last week, driven by fresh investor skepticism and souring sentiment on the heels of Binance’s announcement that it plans to buy out rival FTX, after concerns over FTX’s liquidity were raised.
Bitcoin fell below $17,000 for the first time in two years Wednesday afternoon. Ethereum is seeing a similar downturn, falling below $1,200 for the first time since crypto’s crash over the summer. The token continues to plummet, getting dangerously close to falling below $1,100, as of Wednesday afternoon.
While bitcoin and ethereum prices have remained low compared to last year, both tokens had been relatively steady, even in the face of Fed rate increases, tumbling foreign currencies, the continued war in Ukraine and stock market crashes.
“For a long time, bitcoin has aligned itself with broader risk appetite in the markets but it goes without saying that Tuesday was not one of those days,” said Craig Erlam, senior market analyst at Oanda. “Cryptocurrencies have been pummeled at the start of the week with bitcoin down almost 20% in two days at one stage amid concerns over FTX and the implications for the FTT token.”
So, why is crypto tanking after nearly a month of stability? Let’s dig in.
Why Is Crypto Crashing?
The crash is likely due to the unfolding drama happening at FTX, a popular crypto exchange. As a result of a significant liquidity crisis at FTX, Binance CEO Changpeng Zhao announced Wednesday that Binance will acquire FTX. Binance is the world’s largest centralized crypto exchange, and FTX was…
![Anticipation for Ethereum [ETH] 2.0 rises as metric reaches all-time high](https://crypto.newswireservice.net/wp-content/uploads/2023/01/ethereum-wale-1000x600-350x250.jpg)
