The crypto market has been on a roller-coaster ride this year, with bitcoin and ethereum reaching new highs before plunging sharply. But what if the worst is yet to come? Some analysts warn that a combination of factors could trigger a massive sell-off that could wipe out most of the value of cryptocurrencies.

One of the biggest threats to the crypto market is China, which has been cracking down on mining, trading and holding digital assets. China accounts for more than half of the global bitcoin mining power, and its recent ban on mining in some regions has caused a drop in the network’s hash rate and difficulty. This means that bitcoin transactions are slower and more expensive, and miners are losing revenue.

China’s hostility to crypto is not new, but it has intensified in recent months as the country prepares to launch its own digital currency, the digital yuan. The digital yuan is designed to give China more control over its monetary policy and financial system, and to challenge the dominance of the US dollar in global trade and payments. China sees crypto as a threat to its sovereignty and stability, and wants to discourage its citizens from using it.

Another factor that could hurt the crypto market is the US government’s stance on regulation and taxation. President Joe Biden has proposed to raise the capital gains tax rate for wealthy investors, which could affect crypto holders who have made huge profits in recent years. The Internal Revenue Service (IRS) has also been stepping up its efforts to track down crypto tax evaders, sending letters and subpoenas to exchanges and users.

The US government is also concerned about the potential risks of crypto to national security, consumer protection and financial stability. The Securities and Exchange Commission (SEC) has been suing some crypto companies for allegedly violating securities laws, such as Ripple Labs, the issuer of XRP. The SEC has also been delaying the approval of bitcoin exchange-traded funds (ETFs), which could boost institutional adoption of crypto.

The third factor that could crash the crypto market is the Federal Reserve’s monetary policy. The Fed has been keeping interest rates near zero and buying billions of dollars worth of bonds every month to support the economy during the pandemic. This has created a lot of liquidity and inflationary pressure, which has benefited crypto as an alternative store of value and hedge against inflation.

However, the Fed has signaled that it may start tapering its bond purchases later this year, and may raise interest rates sooner than expected if inflation persists. This could cause a reversal of the liquidity and inflation trends that have boosted crypto, and trigger a flight to safety among investors. Higher interest rates could also increase the opportunity cost of holding crypto, which does not pay any interest or dividends.

These three factors could create a perfect storm for the crypto market, causing a panic sell-off that could erase most of the gains made this year. However, some crypto enthusiasts remain optimistic, arguing that these challenges are temporary and will not affect the long-term value proposition of crypto. They believe that crypto is here to stay, and that it will eventually overcome any regulatory or technical hurdles.