Bitcoin prices have plunged about 10% in the previous five days, to a near three-month low. On Friday, January 7, the cryptocurrency fell as much as 5%, hitting its lowest level since late September.
The cryptocurrency has lost more than 40% of its value since November. The volatility that has dogged Bitcoin since its inception 13 years ago appears to have persisted.
One of the causes for the drop is a sell-off in cryptocurrencies, which has to get fueled by fears of stricter US monetary policy. According to Reuters, the cryptocurrency trading at around $41,704 based on US payrolls figures, which fueled some bargain buying.
The network shutdown in Kazakhstan is another factor in Bitcoin prices. Kazakhstan has a burgeoning cryptocurrency mining industry, and the country’s internet outage affects the digital currency value.
According to a Reuters report, the digital cryptocurrency has been under pressure following a US Federal Reserve meeting that considered adopting more aggressive policy action, sapping investor enthusiasm for risky assets.
“As inflationary fears and rate hikes appear to be at the forefront of speculators’ minds,” Matthew Dibb, COO of Singapore crypto platform Stack Funds, said.
While probing a multi-million dollar scam connected to fraudulent online investing mobile apps, Pakistan’s Federal Investigation Agency has issued a warning to a renowned cryptocurrency exchange.
According to a press statement from the FIA Cyber Wing (Sindh), “Hamza Khan, the general manager/growth analyst of Binance Pakistan, has been given an order of attendance to explain his stance on the company’s tie, to “fraudulent online investing mobile applications.”
Wondering about the reasons lead to the dropping of Bitcoin? The guide walks you through the major causes explaining why Bitcoin is falling so much. Without further ado, let’s get started.
Institutional support retreats
A short reversal in the hypothesis of increasing acceptability for cryptocurrencies appears to be part of the explanation for bitcoin’s decline.
Musk claimed earlier this year that he was purchasing more than $1 billion worth of Tesla stock. Several payment providers have indicated ambitions to expand their crypto capabilities, and Wall Street banks have begun to form crypto trading teams for their customers. In mid-April, Coinbase, a cryptocurrency exchange, became public through a direct listing.
Musk declared last week that Tesla no longer accepts bitcoin as a form of payment due to environmental concerns. Tesla is not selling its existing bitcoin holdings, he said on Twitter on Wednesday, using emojis to signify the business has “diamond hands.”
And Coinbase, which soared past $400 immediately after its initial public offering on April 14, swiftly gave up those gains, trading under $220 per share on Wednesday morning. Its direct listing date coincides with the most recent all-time high for bitcoin.
As bitcoin and associated assets have gained in importance in the financial markets, regulators throughout have intensified their attention.
“We predict that a government crackdown on cryptocurrencies would lead to a new ‘crypto winter,’ with less trading activity.” Many nations may consider cryptocurrency as a danger to their fiat currencies and monetary system, according to Bernstein’s Harshita Rawat, who wrote a note Tuesday.
On Tuesday, China reaffirmed its prohibitions against other digital currencies, prohibiting financial organizations from offering services for crypto trading. China is building its government-run cryptocurrency.
In the United States, newly appointed Securities and Exchange Commission Chair Gary Gensler stated earlier this month that he believes regulators should be “technology agnostic.” But consumer protection in crypto markets is required.
The emergence of dogecoin, which began as a joke before garnering widespread appeal thanks to Musk’s support, may have harmed the crypto market’s overall trustworthiness. Some smaller, less established currencies’ movements show that the crypto bull market is fueled by speculative day trading in equities rather than institutional interest.
In recent weeks, interest in other, fewer cryptocurrencies has risen. Dave Portnoy, the founder of Barstool Sports, stated on Monday that he had acquired $40,000 worth of safe moon, a cryptocurrency he termed as an “s—-coin.”
Kazakhstan’s internet Shutdown
Yet another reason leading to the drop of bitcoin value is Kazakhstan’s interrupt disruption. This nation has a fast-growing cryptocurrency mining, and the blackout of Kazakhstan’s network is hurting the digital coin’s valuation.
Multi-million dollar Bitcoin scam in Pakistan
Pakistan’s Federal Investigation Agency has recently issued a notice to a well-established cryptocurrency exchange while investigating a multi-million dollar bitcoin scam linked to fraud online investment mobile app. This scam has further led to the drop-off of Bitcoin’s value.
Part of bitcoin’s downfall appears to be a temporary reversal in broader acceptability, as well as regulatory worries and weakening in more speculative based of financial markets. The latest decline follows a remarkable climb that began in the second part of the previous year.
Bitcoin’s price has risen by more than 200 percent since September, thanks to a strong bull run fueled in part by hedge fund managers, banks, and other businesses embracing cryptocurrencies.