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There is no doubt that the crypto winter is here as Bitcoin price falls below $20,000 for the first time since 2020. With the largest market capitalization, Bitcoin has lost about 70.3% of its market price as compared to its All time-high price ($69,000) in November 2021. Losing money is a hard pill to swallow, this makes the recent bear market the scariest moment for investors. No one can accurately predict how long it will take for the market to recover but from history, every bear market will surely be followed by a bull run. In addition, this is a good moment as it exposes scam projects.
WHY THE FALL IN THE PRICE OF BITCOIN?
The recent fall in the price of BTC can be linked to so many reasons which include
• STOCK (EQUITY) MARKET CRASH
It has been seen that the movement in the crypto market is far more connected with the stock (equity) market. According to Investopedia, the digital currencies’ prices have fallen and rose parallel to equity prices in the year 2021-22. For example, we have seen a 6% downfall in some tech stocks in the past few days, and we can witness its relative effects on the crypto market.
• SHOOTING INTEREST RATES UP
The American economy suffers adverse effects of the vast money printing used to ease the burden of the early COVID-19 lockdowns. This calls for action, leaving the US Federal Reserve to increase the cost of debt by shooting the interest rates up to regulate the extensive inflation in the market. This news has made people sell their digital assets as they lose hope and trust in the financial mechanism. Ultimately, it badly impacts crypto.
• THE COLLAPSING CELSIUS NETWORK
Celsius Network is a cryptocurrency lending platform known for offering depositors a yield of up to 18.63% on their deposits. It’s like a product a bank would offer, this makes the company popular. Lately, Celsius Network supports over 101,000 customers worldwide containing over $730 million in assets. In addition, the platform has facilitated nearly $5.5 billion in loans. More so the company has made $12 million in interest payments. Recently, this leading crypto lender Celsius Network has frozen all the withdrawals and transfers of cryptos from one account to another. Following this, it is about to reach the brink of bankruptcy. This news add fuel to the fire as the crypto market tumbled after the Celsius announcement, with Bitcoin dropping as much as 14% to the lowest level since December 2020 and other major tokens also falling sharply.
• CRYPTO REGULATIONS
Authorities are antagonistic to cryptocurrencies, the year 2022 has been crucial for all major digital assets causing fluctuations in their prices. For example, the Indian government plans to bring a crypto bill intending to ban private digital currencies in the country. This is how it becomes difficult for crypto enthusiasts and investors whether they should embrace the new form of future money or not.
• THE STABLE COIN - TERRA LUNA CRASH
The massive Terra Luna crash is one of the fundamental reasons for the crypto market downfall that we witness nowadays, the crash has cast doubt on the entire crypto market. And now it’s clear that even the so-called stable coins have proven to be unstable. This event not only affects the price of Bitcoin but also shakes up the entire crypto ecosystem.
WILL BITCOIN RISE AGAIN?
This is probably one of the biggest questions on the minds of every cryptocurrency investor. The Cryptocurrency market has crashed heavily in the last two weeks with several top crypto prices dropping to new lows in 2022.
Surely Bitcoin will rise again, crypto is here to stay, and the belief that it may perish is just a myth. With the recent adoptions by the following companies, the future is bright
● Walmart is recruiting crypto expert to oversee its blockchain strategy
● Visa, Mastercard, Paypal, and Square are adopting bitcoin.
● Tesla continues to go back and forth on its acceptance of bitcoin payment
● Rumor has it that Apple will use some of its large cash reserves to invest in Bitcoin
As a crypto investor, the recent price drops are extremely worrying. Fear often leads us to buy high and sell low, which is against investing logic. Don’t give in to fear. Be patient and do your analysis. The current dip in the Bitcoin price allows investors to buy Bitcoins at the 2021 price. To trade with no stress and choose between market and limit orders, more so to enjoy a 0% trading fee Lykke exchange remains the best platform for you to trade.