Bitcoin dropped to its lowest value in a year and a half of around $23 000 in a major crypto meltdown on Monday, as investors shied away from riskier investment options in the midst of a raging global crypto disinvestment barely seven months after the cryptocurrency soared to new highs.
The biggest and most recognized crypto coin also took a hit after word broke that blockchain lending system Celsius Network has halted withdrawals due to unstable market conditions.
As a result of the large shift, losses have intensified. Binance has impermanently stopped Bitcoin withdrawals; however, their clients were encouraged to use other platforms.
After Friday, when statistics revealed US inflation at a new 40-year peak, global financial markets dropped drastically.
This exacerbated fear of a global recession prompted traders to flee volatile crypto coins such as Bitcoin and Ether in favor of traditional secure options such as the Dollar.
Bitcoin as well as Ether are still bleeding badly in the fight, Hargreaves Lansdown expert Susannah Streeter stated. As investors worry about plunging consumer prices all around the globe, they are ripe targets of the exodus away from risky assets.
In midday London transactions, the virtual currency fell more than 16 percent to $22,603, a low last observed in December 2020. After hitting a record peak of $68,991.85 during November, Bitcoin has lost 66 percent of its value.
Traders looked for some sort of protection at the beginning of the week, as the Federal Reserve of the United States is expected to increase loan rates in a more aggressive fashion to counteract higher inflation.
The report from Celsius Network exacerbated Bitcoin’s drop. They announced that all swaps, exchanges, and withdrawals between accounts would be paused on Celsius, according to a statement from the site. This course of action was pursued owing to a severe market climate, as per the network.
When contrasted to the conclusion of 2021, the overall value of consumer investments had already plummeted by higher than 50% to around $12 billion during May. According to data collector CoinGecko, the entire crypto industry is valued at less than $1.0 trillion at the moment.
That’s dropped from almost $3 trillion seven months prior when the industry was riding a wave of tremendous investment demand and rising approval from major financial institutions.
El Salvador as well as the Central African Republic, as an indication of the increased significance of cryptocurrency, has taken the risk of recognizing Bitcoin as legal currency, despite heavy condemnation from international banks.
Due to the world’s largest central banks’ easy cash policies, the crypto sector has benefited from a massive injection of funds in recent years.
Inflationary pressures have prompted stricter monetary policy around the world, contributing to the industry’s demise.
The fear is that inflation may become too intense for central banks to manage, forcing them to saturate economies with cold water in the form of even sharper interest rate hikes to bring it under control, according to Streeter.
With the age of cheap money swiftly coming to an end, investors are becoming increasingly risk conservative and abandoning digital assets.
Many experts have been shocked by the collapse of what seemed to be an ever-growing industry. The fact that Bitcoin has lost so much value (66%) since its all-time high last year is something that nearly nobody could have predicted.
Bitcoin once seemed impervious to many “real world” problems so to speak; however, in the slew of the recent global turmoil, this sense of security has proved to be false. Massive hikes in energy prices combined with extreme interest rate hikes have resulted in the crypto industry as a whole becoming worth a third of what it was valued at during the crypto craze late last year.
The Bottom Line
With so many major investors abandoning crypto in favor of less volatile, traditional assets, it begs to be asked if the crypto sector can once again rival its peak. Of course, once energy prices and inflation rates return to regular levels, it is entirely possible that individuals and institutions may be tempted to invest money back into the tool that has made so many millions of Dollars; however, at the moment, this does seem pretty unlikely. It should definitely be interesting to see how major crypto industries respond to the current turmoil in the industry.
TrustPedia is a financial portal-based research agency. We do our utmost best to offer reliable and unbiased information about crypto, finance, trading and stocks. However, we do not offer financial advice and users should always carry out their own research.Read More