“Why the crypto dip?” is probably among the most common questions asked by Twitter NFT collectors these days. Some say it’s related to the NASDAQ stock market, while others blame major institutions that started investing in the crypto space – NFTs included.
Either way, one thing is certain: cryptocurrencies went down by 30%, and that includes DeFi tokens too. The statistics are particularly concerning for Ethereum, as we’re used to seeing it grow in each January of the previous years.
Why did the crypto dip happen?
Unfortunately, the crypto market stepped into 2022 on the wrong foot. This week, both Bitcoin and Ethereum (the two most successful cryptocurrencies right now) have decreased. Part of the reason might be China’s 2021 recent ban on crypto mining.
A more recent reason, though, are the increased inflation rates globally. For the first time in history, economic experts believe inflation might become the main economic challenge of 2022. In fact, prices had been rising at the fastest pace in nearly 40 years in 2021. Therefore, it’s no wonder that all markets are now being affected – including crypto.
A simple look at the graphic below reveals the shocking 30% drop Ethereum experienced in the past 7 days:
But what if there’s something else going on?
For example, the popular NFT influencer Beanie blamed big institutions that took interest in the crypto sphere recently. According to his theory, these institutions still view crypto as a high-risk asset. As a result, they would be the first to “dump” the market just as quickly as they had entered it.
Are institutions ruining the crypto market?
In 2021, we’ve seen plenty of major brands and big names from all across the globe engage with crypto – especially when it comes to NFTs. From Nike and Samsung to giant investors such as Elon Musk, these trendsetters have already invested millions into the market.
Obviously, institutions can no longer ignore this extraordinary growth in any market. However, Twitter users such as @boredapewood believe that the NFT space is “pretty much decoupled from the broader market” and might not be affected by the potential upcoming changes.
Even so, it’s difficult to tell whether institutions are the reason behind the recent crypto dip. In this case, only time can tell.