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The Bitcoin price has lost half its value – again




Bitcoin extended its fall on Monday, and has now fallen by half from a record high.

The cryptocurrency has fallen in six of the last seven days, and has retreated 10% on Monday, compared to the level at 17 on Friday. It fell below $ 33,000, the lowest level since July, before trading around $ 34,200, according to data from CoinDesk. Bitcoin’s record high was reached on November 8 to $ 68,990.90.

The fall should not come as too much of a surprise to crypto enthusiasts. This is the eighth time since Bitcoin was launched in 2009 that it has fallen by more than 50%, and the third time since 2018, according to Charlie Bilello from Compound Capital Advisors. From April to July last year, it fell 52%.

Cryptocurrencies have been swept up in broad market sales affecting more risky assets, especially technology companies. The driver, analysts say, is the US Federal Reserve and its plans to withdraw stimulus from the economy and raise interest rates. The technology-heavy Nasdaq stock index has fallen 1[ads1]2% since the beginning of the year.

“Crypto is a burgeoning high-growth industry that acts as a risk asset,” said Martha Reyes, head of research at Bequant, a European digital asset brokerage. “It’s pretty dramatic this morning and completely driven by the macro environment, hit by the Fed.”

It also appears that retail investors are taking a step back from investing in crypto, according to Reyes. The volume of smaller transfers, a proxy for retail use, fell by more than 40% between the first and fourth quarters of last year, according to data from Glassnode, a blockchain data research firm.

This may be because market interest is shifting towards more trendy digital assets. Google search for ‘NFT’, the abbreviation for non-fungible tokens, climbed steadily throughout last year and into 2022. Meanwhile, searches for “bitcoin” fell in June last year and remained at a low level until they rose last week. sale.

Some cryptocurrencies have fallen even further than bitcoin. Ether, the second most popular digital currency, is down 53% from the last record, also in November. Solana, a cryptocurrency that became popular last year, has fallen 64% and Shiba Inu, another digital currency based on a meme, fell 75%.

“It makes sense to me that broad crypto is hit hard. It’s all about innovation, which should correlate with risky assets,” says Joel Kruger, currency strategist at LMAX Group. “Ether is almost like an index, the sum of all the projects together at ethereum blockchain “such as games, NFTs, decentralized finance projects and smart contracts.

The movements are in sharp contrast to the expectations of some investors and analysts. A JPMorgan analyst said in October that bitcoin could eventually reach $ 146,000.

Shiba Inu Coin’s recent rise, and subsequent decline in value, are part of a growing trend of meme coins competing with some of the largest digital tokens in the world. WSJ retail investment reporter Caitlin McCabe explains why investors are pouring money into this meme-based cryptocurrency. Photo: Amber Bragdon / Getty Images

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

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