Why are Crypto Markets CRASHING? Kashif Raza explains
Bitcoin was trading below thirty thousand dollars this morning. Other top tokens like ethereum solana, doj, have also crashed. We have with us kashif crypto, influencer and founder of fittening, who will shed light on what has caused this crash and what is the way forward. So, thank you, sir. Thank you for joining us, so lets just dive into the questions. Thank you. So why are the crypto markets crashing? Okay, uh? So thank you for calling me a gangster, so there is not just one reason. So there are a couple of reasons uh because of this, the crypto market is crashing. So, to begin with, the first reason to begin with, is you know uh that we then you know what happened that during covet era, most of the countries they when they came up for us for solving that problem? You know when, when the entire economies were shut down most of the countries they they took an option of printing more money to support their economies to support their citizens like in in a country like u.s, where they were giving two thousand dollars to every cities like In canada and every but every uh other places they were issuing money and depositing money in their citizens account and they were supporting economy. So basically they were printing money. So at that very moment there was a huge liquidity. You know the liquidity increased in the market and people were actually getting free money and the moment they were getting free money.
They were demanding for more things in the market and because of that, the the inflation was expected to rise, and now exactly that, we saw that in u.s there was this inflation rate of more than 7 to 7.5 percent, and that was actually scary. Keeping in mind these standards of us, and not just us, argentina, fifty percent, every other place, inflation is rising and also because of this uh russia, ukraine fight as well. We are asking there is a rise in the petrol prices and the inflation is increasing at a very fast pace. Now the us is worried, uh and because of that, the central bank, the fed uh in u.s, has decided to you know, increase the rates right when they say that they are about to increase the rates. What happens that you know the liquidity gets out of the market right so because it will be. It will be costlier now for the commercial banks and for the consumer to take a loan, because now itll be more costlier to take a loan. So liquidity goes out of the market. So what has happened that the mobile liquidity has gone to the market, the financial institutions? Now they can sense that? Okay, now the stocks are going to go down right. The profitability of the companies are going to go down. Uh there are going to be more, you know, people are going to be chucked out of their. You know, uh of their offices right there is going to be mass layoffs as well.
So the all these feelings have actually taken the stock markets down and the moment stock market is going down. That has a rippling effect on crypto as well, because the financial institutions are the same. They are also invested in stocks and crypto as well thats. The reason we are seeing that these two markets are highly correlated as the nasdaq is has gone down. Stock markets has gone down, tech stocks have gone down in u.s. Similarly, crypto market has also fallen down and it has taken a break, and these two markets are highly correlated. People say that these are not correlated that will, i think, be a time in future when you see that you know today, gold has a market cap of 11 trillion. Us dollar gold is uh, you know, is inversely inversely proportional to the stock market, uh and similarly well see in future, when the crypto market will grow in size well see that crypto market will alienate from itself from the stock market. But at this very moment these are highly correlated okay, so from what youre saying ive gathered from because of the geopolitical intentions, the pandemic, the inflation all of this has caused the equity markets and the crypto markets to crash. So my next question, for you is, will the markets recover and what can we expect in the near future right? So a country? What is happening is uh. You know when you say that the markets will recover.
The entire global sentiment is quite bearish right now, right. So, as i told you that you know the fed has increased rates, you know in crypto market itself, uh, you know other than fed there are. There are instances that have taken place recently like to begin with. There is this latest uh, you know decentralized, stable coin algorithmic, stable coin. That was called usd this. What has also created a lot of panic because luna foundation, you know they wanted to uh. You know back usd with bitcoin right, so they said. Okay, fine in case of eventualities. They want to make this stable coin a little more stable by having a backing of bitcoin, so they bought bitcoin worth 3.5 billion us dollar to back usd now what was happening that the moment usd uh started falling down? You know the price came down uh and uh on the same side. Luna also started crashing because when, when usd falls down, you know uh, so more luna is minted right more the supply of luna gets increased. So when usd was uh going down uh there was this perception in the market. There was this uber in the market that now luna foundation might sell bitcoin, so they have a 3.5 billion us dollar worth of bitcoin at the back of usd. So there was this panic, but i say i how i look at thing is that 3.5 billion u.s dollar was a very small amount, so people actually reacted a little more than that was required because 3.
5 billion us dollar sell off in bitcoin doesnt doesnt mean anything In fact, it is a very negative small amount, but people reacted today. I think this that panic and overall with fed uh news. I think this entire panic, you know, led to a difficult uh scenario at this very moment how it will increase when it will improve. I think the global sentiment right now is is on a bearish side. It might take a little time. That is the reason that you know as an investor. Whenever you enter into this market, you need to have a very long term perspective. Yes, so the ust debugging and the fed rates increase in the rates is what has caused this and i think what youre saying is that investors need to hold on so talking about investors. So what should investors do like youre, saying theres a lot of panic selling thats happening in the market, so should investors fall to this panic or should they hold for long term? My my honest opinion is that you know whenever an investor is entering into the market. You know most of the projects other than bitcoin are still experiments. The you know the you cannot say that those, although all the projects other than bitcoins, have achieved what they wanted to achieve. Most of them are experiments. Most of them will get tested at the end of the day. These are technologies. You know when, when the web 2 was born, when the internet was born, you know there were 457 ipos during that time.
People, actually you know they were. They were very excited about this new tech about internet and 457 companies. They entered into this space, but but you know after two years, only 76 were there, and today we see that out of the 457 or only four to five exists till date. Now, what is happening in web3? Also, there are many projects. There are only experiments so for any investor. First, they need to realize that they they do not need to invest their 100 money in only one project, and because all these projects are getting tested, solana got tested, polygon contested, luna got tested, tron got tested, ethereum got tested. All these will go through these hard times. Only bitcoin is the one that has seen the test of time. You know the biggest test of bitcoin was when china banned uh, you know uh bitcoin mining, so investors need need to realize, and investor need to be very careful before they enter into the market. The substantial amount need to go into bitcoin and then those blue chips, though important uh projects that exist. They need to figure out and do their research before putting in their entire money, but if they are not sure about it and if they do not have time so the safest bet today is to enter only bitcoin and ethereum other than that. They should be very careful before entering into this uh into this market. Okay, so these were some safe investments that youve listed out for potential investors and, like you said that bitcoin has been tried and tested, so has ethereum and other projects.
People need to do their own research before entering that, so my last question to you would be that will this crash impact the growth of weaponry as well so concept uh, since this entire ecosystem is interrelated right, so suppose, if bitcoin goes down right, the the overall Sentiment goes down, the overall sentiment is bearish. So what happens that you know during these times web 3 projects? The liquidity goes out of the market right and especially the new projects. You know that are that are planning to raise funds. They also find it very challenging right, because what is happening that today, people dont want to you know, sell bitcoin at loss and then put in money somewhere else, peoples money they get stuck during this time in bearish market people they just hold on to things they Dont want to take chances; they dont want to take risks so obviously for a weaponry. Ecosystem um, you know in terms of the liquidity, yes, its a problem, but in terms of growth, you know, people who are building in this space. They dont get bogged down by these scenarios because theyre anyways building so good projects who have a long term vision and who have a good technology or a good product, and if theyre trying to solve solve something, they will continue to continue to flourish. Just that this moment, at this very moment, people who are looking to raise funds web three projects who are looking to raise funds will definitely find it very challenging at this very moment.
Okay, so from what i understand is youre, seeing that long term projects which are you know going to build for the future theyll be tested in this time, and good projects are going to come out of this crash. So it was great interacting with sister. Thank you. So much for taking out your time um. I hope we keep interacting like this and i hope that the market recovers. Thank you so much. Thank you. Thank you very much, Music.