Bitcoin sinks: why the price of crypto fell 50% in just 7 months

Bitcoin fell below the u$s 30.000 for the first time since july of last year, since the rise in interest rates makes investors flee from the most risky corners of the world financial markets.

The most traded cryptocurrency in the world fell to the u$s 29.730 in operations in Asia this Tuesday, according to Refinitiv data, before recover up to $32,000 on the european activity. It has fallen more than 50% from the peak it reached in November.

Others digital assets have also come under heavy pressure in recent weeks, causing them to the market value of the top 500 digital assets has dropped by half from the record reached in November 2021, to the u $ s 1.6 billnaccording to CryptoCompare data collected by the Financial Times.

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The cryptocurrency crash occurs at a time when investors have moved away from speculative financial assets after one wave of rate hikes by central banks of all the world unleash turbulence in the markets. Others risk assetslike the shares of loss-making companies and thes junk bondshave also been pressured, but the cryptocurrencies have suffered a particularly intense blow.

The cryptocurrency market I bloomed when central banks they took the interest rates to historic lows in the high point of the coronavirus crisiswhich led the operators to look for assets that offer a high return. However, one big sell-off in global government bond markets this year he has done sraise yieldsexpanding the possible profits that investors can obtain from the holding high-grade debt.

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It is a risk in all asset classes, including cryptocurrenciessaid Daniel Ives, a strategist at Wedbush Securities, who added that there was “nowhere to hide”.

In a sign of how deep the losses are for the cryptocurrency marketan indicator from FT Wilshire that tracks the top five criptosexcluding bitcoinha dropped more than 70% from its recent high. Cryptocurrencies that used to grow rapidly, such as Solanawhich was presented as an alternative to the network Ethereumhave quickly deflated.

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Listed shares of companies exposed to cryptocurrencies have also plunged. MicroStrategydirected by the defender of the cryptocurrencies Michael Saylor, is down 60% this year. Coinbase has fallen 67% in 2022, dipping below $100 on Monday for the first time since the exchange go up to New York Stock Exchange in April 2021.

Las bitcoin mining companieshow Bitfarms y Marathon Digital Holdingswhich use powerful computers to solve puzzles for which they are compensated in cryptocurrency, have also fallen sharply.

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The recoil also revealed how the bitcoin performance and of others cryptocurrencies was closely tied to the US stock market. The correlation between bitcoin and the Nasdaq Compositea gauge weighted by big US tech companies, has hit all-time highs, according to data provider Kaiko.

“Some investors are playing with the cryptocurrencies like a hedge against inflationbut are trading like the Siamese twin of the NasdaqIves said.

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