Bitcoin “collapsed” to the lowest level of 2022, investors panic?
Bitcoin price plummeted in the past week, dragging red across the cryptocurrency market after the US Federal Reserve (FED) raised interest rates by 0.5%. At the same time, trouble also occurs with leading blockchain projects because the system is overloaded, the platform cannot meet the increased transaction demand.
Bitcoin “collapsed” to the lowest level in 2022
Two days after the Fed announced an interest rate increase of 50 points (0.5%), the world’s largest digital currency fell about 8%, falling below 36,000 USD. On 5/5, data from Coinglass show more 497 million USD The futures contract position has been liquidated. In which, about 120,000 investors lost their accounts with a large amount coming from bullish (Long) positions.
By May 8, Bitcoin continued to correct, falling to the level of 34,500 USD/dong, the lowest since the beginning of the year. Bitcoin’s decline has not shown signs of stopping, by the morning of May 9, the price of BTC was only 33,500 USD/copper. In the past one week, the world’s largest digital currency has dropped about 14%. Compared to the top 68,000 USD Since November 2021, the Bitcoin price has nearly halved.
Bitcoin’s price drop has led to the red color covering the entire cryptocurrency market. Projects in the group of 10 largest cryptocurrencies (excluding stablecoins) all dropped sharply. Ethereum (ETH) is down 15%, still 2,400 USD/dong, BNB down 11% to 346 USD/dong, Solana (SOL) fell 17% to 74 USD/dong, LUNA reduced by 25%, remaining 61 USD/copper.
The market decline also led to a whale of the Fantom project insolvent. This person’s collateral was liquidated, leaving the Fantom ecosystem at risk of collapse. In the list of major projects, NEAR and TRON are the two cryptocurrencies that are affected by the announcement of stablecoins for the ecosystem with high lending rates.
In the past week, the market’s sentiment index was also negative. From about 28 points, in the fear zone, data from Alternative on 9/5 shows that the market is at 11 points, extreme fear.
According to experts, the reason the cryptocurrency market fluctuates strongly is due to the global macroeconomic influence. Inflation is high, governments of countries have to raise interest rates to improve this situation.
Outdated infrastructure causes Solana and Ethereum to crash
Before the cryptocurrency market crashed, Ethereum and Solana crashed. This shows the weakness of blockchain projects with a large number of users. Excluding stablecoins, ETH is the second largest coin, Solana is fifth in the group of 10 largest crypto projects.
On May 1, the Metaverse Otherside project opened for sale NFT land in its virtual world. Otherside is part of the NFT Bored Ape Yatch Club (BAYC) collection ecosystem and the Apecoin token. It is the large amount of transactions that are cornered at one time, causing gas fees (transaction fees) on the network to be pushed up to high levels. 4,800 USDmaking Ethereum almost crippled.
High transaction fees and slow speeds have been a problem on the Ethereum network for a long time. Axie Infinity, the project that opened the GameFi trend, was built on ETH. However, because of fees and transaction speed, the project team had to add Ronin sidechain to improve the situation.
The high transaction fees caused the founder of ETH to speak up. “Transaction fees need to go down” 0.05 USD acceptable,” Vitalik Buterin wrote on Twitter. Ethereum is also in the process of transitioning from Proof-of-Work to Proof-of-Stake to improve speed and fees. However, The Merge event has been delayed than expected.
Meanwhile, the problem on Solana was even more serious when the network was completely paralyzed, users were unable to transact for more than 8.5 hours. The cause of the problem stems from OpenSea’s sale of NFTs that support Solana. From there, automated trading machines (bots) send a large number of orders to the system, causing network congestion. According to Solana Statusup to 4 million transactions per second are sent up, overloading the system.
This isn’t the first time Solana has gone down. Many similar incidents have occurred since August 2021, but so far the network has not come up with a solution to completely overcome it.
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