Why Bitcoin Value is Going Down Worldwide?
Recently, all of the major cryptocurrencies have been trading in the red, putting even long-term investors to the test. Every day, the price of cryptocurrencies drops to a new record low. One such cryptocurrency is bitcoin. Even though it is the largest cryptocurrency in the world, Bitcoin has dropped to $20,407, its lowest level in 18 months. It has decreased by almost 60% so far this year.
Success, safety, and wealth are things that the crypto sector can provide individuals, but stability is something it cannot guarantee. Even the largest cryptocurrencies, like Bitcoin, have had crashes, but why specifically? Wondering why? Here are the reasons.
Crash of Luna-Terra
It all began after the Luna-Terra. For both its investors as well as the overall crypto economy, it was an incident with serious repercussions. A stablecoin called Terra coin had a market capitalization of more than $18 billion before the crisis and as a result, many investors lost all of their life savings.
Also, Terraform Labs which is the business behind Terra started a strategy to sell all of its Bitcoin reserves to restore the peg to $1. However, Luna lost 99.9% of its value but ultimately failed to do so. As a result, it caused the market for cryptocurrencies to lose more than $40 billion.
The Stock Exchange
Another reason for the fall of bitcoin cryptocurrencies is the stock exchange or the equity market. As the cryptocurrency market is connected to the equities market, the stock market has an impact on cryptocurrency values.
It was stated that the price of Bitcoin, the Musk-backed Dogecoin as well as Ethereum, all fell under $23,000. Due to investors' selling of hazardous assets and the closely correlated values, the stock market as a whole is down.
The Rise in Interest Rate
In an effort to curb inflation, the US Federal Reserve has agreed to raise interest rates. Undoubtedly, the fast increase in interest rates is another reason for the downfall of bitcoin cryptocurrency and why both the stock and cryptocurrency market experienced a sharp decline. As a result, investors lost faith and ended up selling off their digital assets. All these together led to a bloodbath in the cryptocurrency market.
Is it Worth Investing in Bitcoin Cryptocurrency?
Thinking of investing in Bitcoin Cryptocurrency? Wondering if it is a great option? If you're wondering if investing in cryptocurrency is a high-risk bet with a chance of success but also that you run the very real risk of losing all of your money, it might be a wise choice.
This is because during a global cryptocurrency price crash in 2022, prices of cryptocurrencies, including bitcoin, have been declining. So before investing in make sure to do your homework. Are you investing in a completely useless digital coin or something that provides creative answers to current financial issues? So, if you're thinking about investing in digital assets, carefully examine each project to determine how it might turn out in the future.