Bitcoin lost 70 percent in the market which is the lowest point since 2020. Coinbase, a major bitcoin exchange, has seen its value collapse. A cryptocurrency that touted itself as a safe and secure method of payment has gone bankrupt. Cryptocurrency values have plummeted by more than $300 billion since Monday.
The crypto world went into utter meltdown this week, demonstrating the dangers of the experimental and uncontrolled digital money. Even though famous people like Elon Musk and Kim Kardashian endorsed cryptocurrencies, the declining value of cryptocoins like solana and BTC shows how you can lose 2 years of financial gains in the blink of an eye.
The fear triggered the greatest reversal in cryptocurrency prices since Bitcoin fell over 80% in 2018. The plummeting prices, however, have a bigger impact this time since more people and institutions own the currencies. Some investors compared BTC losing 70 Percent to the financial crisis of cryptocurrency in 2008 as the critics suggested that the loss was long overdue.
Cryptocurrencies date back to 2008, when a mysterious entity known only as Satoshi Nakamoto launched Bitcoin. The virtual currency was marketed as a decentralized alternative to traditional banking. Rather than relying on intermediaries such as banks to process transactions, Bitcoin supporters chose to conduct them among themselves, documenting each one on a shared ledger known as a blockchain.
As the technology expanded from a novel curiosity to a cult-like movement, prominent tech executives such as Mr. Musk, Twitter co-founder Jack Dorsey, and investor Marc Andreessen welcomed it. The value of cryptocurrencies has skyrocketed, resulting in the emergence of a new class of crypto billionaires. Other cryptocurrencies, such as Ether and Dogecoin, caught the public’s interest, especially during the epidemic, when the financial system’s excess liquidity drove people to day trade for pleasure.
Cryptocurrency values peaked late last year and have subsequently fallen as concerns about the economy have grown. However, what came as a turning point that grabbed attention of most of the crypto investors was when Terra USD collapsed in the market. TerraUSD is a stablecoin which means it is designed to be a more trustworthy means of exchange, is often tied to a stable asset like the US dollar and is not expected to vary in value. Ethereum code used by a lot of traders to buy other cryptocurrencies.
Cryptocurrency prices have also plummeted. On Thursday, Bitcoin’s price fell to $26,000, a 60 percent decrease from its November peak, before rising somewhat. Ether’s price has also plummeted, dropping more than 30% of its worth in the last week. Some other cryptocoins like Cardano and Solana are also on a decline
Some analysts believe that such fears are exaggerated. They believe that cryptocurrency has had such fall backs before as well and it has risen even better than it’s last fall out in 2018 during the past 5 years. They are optimistic and believe that the BTC owner will not lose money even if BTC losses 70 percent until its price falls below $21000.
Professional investors who have experienced previous crypto volatility were unfazed. They claimed that many people were hesitant to sell because every other asset was also in decline. Some even attempted to profit from the decrease.
Early investors are most likely still in a good spot. The sharp drops this week have been particularly painful for investors who acquired cryptocurrencies while prices were sky-high last year.
There are a lot of factors that played their part in the cryptocurrency decline such as inflation, rising interest rates and economic uncertainty because of Russia’s invasion of Ukraine. These factors not only imploded cryptocurrencies but also caused stock values of companies like Netflix and Zoom to decline.
Crypto’s demise, on the other hand, is more severe than the stock market’s total drop. While the S&P 500 has dropped 18% this year, the price of Bitcoin has dropped 40% in the same period. Bitcoin has plummeted 20% in the last five days, compared to a 5% loss in the S&P 500 index.
It’s unknown how long the crypto-crisis will persist. Cryptocurrency values have often recovered after significant losses, albeit it has taken several years in some cases to reach new highs. Those who have experienced the crypto fall before were unfazed when BTC lost 70 percent in the market. However, what most people are worried about is how long will it take for Bitcoin to recover its original place in the market and even the most experienced crypto analysts are not sure of that.