So what happens when a decentralized currency requires government-issued currency to determine its value and is bought and sold with said government-issued currency? Well, you get Bitcoin (BTC) falling to its lowest level in 18 months.
As reported by multiple outlets this past week, the popular cryptocurrency has lost 74% of its value from its record high in November. Coinbase says that Bitcoin fell as low as $17,601.58 and stayed below $20,000 on Saturday afternoon.
“Bitcoin breaking the $20,000 price level was long coming, given the pessimism that we have in the market,” said AvaTrade market analyst Naeem Aslam speaking to the Wall Street Journal.
Bitcoin isn’t the only cryptocurrency feeling the effects, with Techcrunch reporting that the total global market cap of cryptocurrencies sank below $850 billion Saturday. According to Techcrunch, another popular cryptocurrency, Ethereum (ETH), is down 80% since its record high back in November. ETH is trading at half of what it was a month ago, with it now being exchanged below $1,000.
Recessions are a difficult time for speculative assets and this latest crypto crash is coming during a challenging time for the crypto sector. Celsius, a leading lender in decentralized finance seems to have gone bankrupt, announcing in a tweet that it was pausing all transactions. There are other reasons for the crash too, such as the Feds raising interest rates to stave off the high inflation, but Stan Schroder does an excellent job explaining crypto’s crazy week.
The importance of Bitcoin’s crashing can’t be understated. As a leading cryptocurrency, Bitcoin dropping might trigger more sell-off in the market as investors lose confidence, according to The Washington Post. The same report also said that experts have no idea where the bottom is for Bitcoin due to how new crypto is along with current economic uncertainty.
For now, however, it’s not looking good for anyone who’s invested in crypto in the past year.
