If you hold cryptocurrency in your investment portfolio, the cryptocurrency market drops can be quite painful. During such times, it's not surprising to hear people asking, "why is crypto crashing?"

The cryptocurrency market is highly volatile and can be difficult to understand. It is a very young and relatively small market. As such, price fluctuations can be snappy and extensive - both to the upside and downside.

Combined with clear and simple-to-understand indications offered by Moralis Money, this guide will help you finally better understand the crypto market. In turn, when the masses panic, shouting, “why is crypto crashing?!”, you'll stay calm, cool, and collected. 

The insight provided in this guide will also help you determine if the crypto market will recover!

Illustrative Image - Bitcoin Riding Rollercoaster, illustrating ups and downs in crypto

How to Identify Crypto Crashes and Pumps in Advance

As you may know, on-chain data always precedes price action. So, having a tool enabling you to easily view changes on the blockchain in a user-friendly, easy-to-understand manner is the key. 

Many tools are focusing on on-chain data. However, in many cases, most provide way too many advanced charts causing information overload. For a casual trader or investor, this further leads to confusion or analysis paralysis. 

The reason why these tools are like that lies in the fact that they are built by data scientists who’ve never traded cryptocurrency. That is why we - a group of experienced altcoin traders and Web3 developers - created a new tool providing simplicity.  

If you want to get straight into understanding what the market will do in the coming minutes, hours, and days, try out Moralis Money - a free solution for understanding what cryptos will do next!

Use the above simulation to preview the power of Moralis Money. Just create your own filter or hit “Apply Filter” for one of the preset filters!

We were able to identify MATIC, EGLD, and most recently, HEX (“is it too late to buy HEX?”), before they pumped. Now, we're empowering other traders to use the same tools as us! 

Finally, you can stop pondering, “why is crypto crashing?” and instead get ready for the upcoming bull market.

Of course, keeping track of the current global financial situation and understanding the basics of technical analysis (TA) can also help you identify crypto crashes and pumps in advance. 

Price chart showing crypto crash

Understanding Why Crypto is Crashing

The crypto market is extremely volatile and runs 24/7 without any regard for office hours or time zones! In turn, it offers countless opportunities - both in the bull and the bear market. So, it’s all about timing!

All crypto markets, even the largest cryptocurrency, Bitcoin, are still relatively small. This fact could be an important aspect and answer to the "why is crypto crashing?" question on occasions when major holders dump their stacks or short the market.   

The overall traditional global financial markets also impact the crypto space. For instance, when the tech markets are in a downtrend, that hurts crypto markets as well. Essentially, it tends to spill over into crypto whenever we see some turbulence in the overall traditional global markets.

Based on that perspective, some answers to "why is crypto crashing?" include various ongoing and even on-time events:

  • Inflationary fears
  • Rising interest rates
  • The fallout from the Ukraine conflict
  • Pandemic crisis
  • Supply chain bottlenecks
  • Bank rumblings

These macro-economic factors sometimes spill over to the crypto market. However, sometimes it can be the exact opposite. After all, many cryptocurrencies are seen as a hedge against traditional markets.

For instance, we have seen investors and traders use crypto markets as a hedge against inflation and bank mismanagement. 

So, growing fears in legacy finance systems may provide an upside for the cryptocurrency markets. 

The only legit way to understand what's happening on the blockchain is to have an on-chain tool with market alpha. With Moralis Money, it is, for the first time, possible to understand the crypto market without being a full-time crypto trader. Furthermore, this powerful tool lets you overcome FOMO, avoid scams, and save time by spotting the next big crypto coin on autopilot.

Micro vs Macro in why is crypto crashing

Micro vs Macro Picture

When you look at specific crypto markets, especially the ones with lower market caps, there are many additional reasons for price crashes. That is especially the case during the bull run.

For instance, whales could be dumping their bags. There could also be “buy the rumor, sell the news” events taking place. The blockchain network in question could be having issues or experiencing downtime. There can also be hacks and scams like rug pulls, etc. 

On the other side, the entire crypto market follows macrocycles. So far, these cycles have coincided with Bitcoin halvings - when the reward for mining new Bitcoin blocks is cut in half. The Bitcoin halving results in miners receiving 50% fewer Bitcoins for verifying transactions. This event takes place approximately every four years. 

So, it’s important to know approximately where we are within the ongoing cycle.

Bitcoin Market Cycle Chart Showing Price Graph

Bitcoin still represents almost half of the entire crypto market. As such, the BTC price directly affects all crypto assets. Of course, there are some rare exceptions, but generally speaking, if BTC crashes, the entire crypto realm goes down with it. This is why any larger Bitcoin mining fallout can also be a reason behind a larger, fast price decrease. 

Title - Is Crypto Regulation to Blame for Why is Crypto Crashing?

Another important aspect to consider is crypto regulation. As a whole, the crypto market is still much like the “wild wild west”. However, many countries try to push certain unfavorable regulations from time to time. This can also be a reason why crypto is crashing at specific times.  

Will Crypto Recover?

When our portfolios are hit by the bear market, it can be quite painful. This makes it challenging to zoom out and look at the bigger picture. However, when we do this, we can see that the overall trajectory of crypto prices has always been positive. 

Bitcoin Recovery Chart

If you look at the above logarithmic chart of Bitcoin on a monthly timeframe, you can see that there’s really nothing to recover. Sure, there are ups and downs along the way, but overall, the crypto space is growing in all aspects. 

Unfortunately, smaller and larger crashes often frighten hobby investors. If you are one of them, make sure to take control and learn to time your entries and exist. 

You can do that by combining the power of Moralis Money with the information about crypto cycles. Once you learn how to find tokens before they pump, you can experience substantial gains. 

Did you know that the average altcoin does a 50x-70x price increase during the bull market? Even so, many new coins offer even 100x or even 1000x gains.   

Four Examples of Crypto Recovery

History rarely repeats itself, but it does often rime. 

Moralis Money

Stay ahead of the markets with real-time, on-chain data insights. Inform your trades with true market alpha!

As such, we can always expect another bull run sooner or later. So, it’s important that you prepare properly before the rally begins. 

With Moralis Money, you can get market alpha, meaning you have all the tools to enter and exit the market at the right time.

Ride the Price of Recovery

While it’s good to know why crypto is crashing when it’s happening, it’s even better to avoid being affected by those crashes. 

Moralis Money will help you avoid those painful moments. If you use it right, it will also enable you to find new coins early. Then, you’ll finally get a chance to experience those 50x-plus gains firsthand. 

The core benefits of Moralis Money come in the form of three main features:

  • Token Explorer - Search for real-time on-chain data to identify crypto tokens with high potential. That way, you get to position yourself properly before the price rallies. This also helps you avoid FOMO.
  • Token Shield - Easily recognize the risk level for any new coin to avoid scams.
  • Token Alerts - Receive email notifications whenever a new coin matches your preset criteria without going full-time crypto. 
Ride the Price Waves after a Crypto Crash with Moralis Money

How to Find the Best Crypto to Buy as Crypto Recovers

By this point, you are hopefully no longer fixated on “why is crypto crashing?”. After all, you know that when prices are low, it’s time to focus on “what’s the best crypto to buy right now?” instead.

1st step: Visit Moralis Money and open Token Explorer.

2nd step: Set the Coin Age filter to find all the coins created in the last X days. For example, let’s say you want to see all coins created in the last three days:

It’s that easy! No more than five clicks and you generate a list of new coins.

Now, there are many garbage coins minted daily. So, how do you focus on good tokens that are gaining momentum?

Several filters can do the trick, and an increase in holders is one of them.

3rd step: Hit the “Add Another Filter” button. Select the metric that you want to use and set its parameters. For instance, you can search for new coins that got 60 new holders in the last day:

By setting in place two simple filters, you are able to get a list of new tokens that may show potential! Just imagine how much time you would otherwise spend researching to create such a list. But with Token Explorer, you are able to do it in seconds. 

4th step: Polish your list by adding more filters. By mixing and matching your search criteria, you’ll be able to find the best candidates. Your unique filters are the way to make the most of raw, on-chain data. So, to pinpoint your winners, rinse and repeat the following:

  1. Select a metric 
  2. Select a filter
  3. Enter a value
  4. Select a timeframe
  5. Run query

Before mastering the above steps, try preset filters: 

Minimize Risk by Avoiding Scams

As mentioned above, one of the core Moralis Money features is Token Shield. The latter is designed to keep you safe and does its thing automatically whenever you use Token Explorer.   

If you look at the results, you’ll see color-coded shields with a DEXTool score:

The higher the number, the lower the risk. To stay safe, we recommend you stick to tokens with green shields on larger timeframes (weekly, monthly). 

You can further utilize the Token Shield feature by applying the “Security Score” filter. That way, you get to only display tokens that match your threshold. For instance, let’s say you want all your candidates to have a security score of 80 or higher:

Spot New Opportunities on Autopilot

Next to FOMO and scams, lack of time is one of the three main obstacles why casual traders fail to profit with altcoins. After all, most folks don’t have the time to watch the crypto markets non-stop. Thus, they miss out on opportunities that tend to come and go fast in the crypto space.      

Fortunately, Moralis Money Token Alerts helps you set your “watch dogs” to alert you whenever new opportunities appear. To use this powerful feature, connect your Web3 wallet (e.g., MetaMask) to Moralis Money. This will enable you to save your queries.

Then, you’ll be able to set notifications for your saved filter via the “Account” page: 

Your alert will ensure you receive an email whenever a new coin matches your search criteria. Thanks to Token Alerts, you can track live on-chain changes without the extra time commitment.

Cross-Chain Opportunities

Despite Ethereum’s dominance among programmable blockchain networks, we can expect the future of crypto to be multi-chain. After all, there are already several chains that have a solid track record. Plus, new networks tend to offer great opportunities. Thus, you may want to get ready for the PulseChain mainnet launch.

That said, Moralis Money lets you explore crypto tokens on all leading EVM-compatible chains. Ethereum, BNB Chain, Polygon, Fantom, etc., just to name a few. You can even use Token Explorer to find gems on Arbitrum, which is a popular layer-2 (L2) network.

Selecting the network you'd like to focus on is a two-step process:

  1. Click the network option
  2. Select the desired network 

Why is Crypto Crashing and Will It Recover? - Summary

So, why is crypto crashing? Throughout the various sections of today’s article, you discovered the main reasons why. The following list sums things up:

  • Troubles of the overall traditional global financial markets
  • Tech industry downtrends
  • Crypto cycles (bear market)
  • Unfavorable crypto regulations
  • Issues with Bitcoin miners (e.g., electricity blackouts) 
  • Hacks, scams, tech issues (negative impact on a micro level)

By looking at the big picture of the crypto market, you also learned that the overall trajectory of crypto prices has always been positive. Thus, we can continue to expect the prices to recover during the next bull market.  

Nonetheless, you also learned how to use Moralis Money to exploit on-chain data in your favor. With this tool, you can spot market changes and identify great opportunities. 

By getting acquainted with Moralis Money before the upcoming bull run, you can position yourself for those 50x-70x gains in altcoins! After all, altcoins are arguably the best answer to the “how to get rich quick?” concern!