Why is bitcoin going down?

Several factors, including rising inflation, geopolitical crises, and changes in US monetary policy. In the US, they continue to drive additional short-term volatility in the cryptocurrency and stock markets.

Why is bitcoin going down?

Several factors, including rising inflation, geopolitical crises, and changes in US monetary policy. In the US, they continue to drive additional short-term volatility in the cryptocurrency and stock markets. Until recently, bitcoin was considered a store of value that was somewhat immune to fluctuations in the value of risky assets. Today, BTC has fallen prey to the types of factors that move the value of risky assets, such as inflation, stock markets and the Fed's monetary policy.

For example, most altcoins face volatility when Bitcoin starts to fall. Anything from negative press to government crackdowns can trigger a chain reaction leading to a crash in cryptocurrencies. It also appears that the Luna Foundation Guard was trying to shore up UST with Bitcoin before the weekend happened. The fear is that Luna Foundation Guard will sell a large part of its bitcoin holdings to shore up its weakened stablecoin.

It follows the recent falls caused by Tesla that took a 180-degree turn in the acceptance of Bitcoin as payment for its products and that China cracked down on initial coin offerings, blocked exchanges and warned against speculative trading. Many investors see Bitcoin's price swings as part of the game, but “volatility is difficult for individual investors to handle, Noble says. XRP, Cardano, Terra, Dogecoin and Shiba Inu each lost 2 percent, while Ethereum and Bitcoin fell by around 1 percent each. Since the beginning of this year, bitcoin's price movement has closely mirrored that of Nasdaq, a benchmark that is heavily weighted toward tech stocks, according to an analysis by data firm Arcane Research.

Bitcoin is now worth half the value it was just six months ago when it hit a market high of £51,000 per coin on Nov. 10, 202, while Terra (LUNA) has plummeted after a major 96% drop. One more blow was struck when China ordered the complete shutdown of Bitcoin mining in its Sichuan province and, in addition, told banks to stop supporting cryptocurrency transactions, in a latest wave of crypto restrictions. To receive payments in Bitcoin or any cryptocurrency, you need to create a free account on cryptocurrency exchanges.

But as digital assets have become more popular, the amount of energy needed to generate bitcoin has skyrocketed. Bitcoin supporters see it as a diversifier in balanced portfolios, but it did not do better than stocks at the start of the coronavirus pandemic. Bitcoin can be synonymous with crypto, as it was designed as an independent virtual currency that could also be a protection against inflation. Bitcoin's volatility is causing uncertainty in the cryptocurrency market that has forced investors to make difficult decisions with their portfolios.

The environmental impact of Bitcoin mining, a complicated process of minting new digital tokens, caused Tesla to withdraw this option for customers. Bitcoin wasn't the only cryptocurrency that felt the initial effects, as most of the top 10 experienced declines in value.

Edmund Elsensohn
Edmund Elsensohn

Hardcore tea nerd. Evil zombie buff. Avid social media lover. Unapologetic twitter enthusiast. Total tv advocate.

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