Edge-Forex Forex

Bitcoin Crashing:

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Since November, cryptocurrency prices have been crashing, and investors are currently on a selling binge, pushing prices to fall even lower. Approximately $130 billion has gone from the bitcoin market since Sunday. On Monday morning, Bitcoin was trading about $35,000, down nearly 50% from a record-breaking $69,000 in November, while Ether was trading around $2,400, also down roughly 50% from a $4,670 high. (By the end of the day, both cryptocurrencies had recovered somewhat.) Meanwhile, the Shiba Inu coin has dropped by 78%.

Reasons Being 

It’s difficult to pinpoint the exact cause of any cryptocurrency drop, but analysts have floated a variety of possibilities. The fall of Bitcoin may be only one part of a larger storey, as the stock market has been trending downward since the beginning of the year and recently had its worst week since March 2020, most likely in response to the Federal Reserve’s decision to raise interest rates and end its stimulus programme earlier than planned. (Stimulus money in people’s pockets also contributed to the cryptocurrency explosion we’ve seen throughout the course of the epidemic.) In harder markets, investors prefer to sell their riskier assets, including bitcoin.

Over the last two years, as more traditional investors have been interested in cryptocurrencies, the stock and Bitcoin markets have become increasingly connected. The prospect of future regulation may also be frightening investors, as the Biden administration is slated to reveal a federal cryptocurrency policy next month. 

Okay, but aren’t the small-time investors sticking to their guns? What if this is simply the Wall Street establishment jumping ship? 

According to the Wall Street Journal, retail investors in particular appear to be driving the reduction in cryptocurrency values, since the number of smaller transfers decreased by more than 40% between the first and fourth quarters of last year.

The sell-off is primarily the fault of new and short-term investors, some of whom purchased at the peak.

Famous crypto boosters freaking out?

Not out loud, at any rate. El Salvador’s president, Nayib Bukele, who made the country the first in the world to use Bitcoin as legal cash, revealed on Friday that his government has purchased another 410 Bitcoin since prices are cheap. On Wednesday, Elon Musk, possibly the most influential crypto supporter, tweeted a meme from the film Interstellar to mock the volatility of cryptocurrency.

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