Bitcoin is the most popular digital currency. It was believed to become the future of transactions worldwide and has been crashing for the last two years. The whole financial market is troubled due to this significant crash.
This cryptocurrency has been behaving unexpectedly turbulently. Periodic highs and lows were extremely frequent. With this regular fall of Bitcoins, it crashed, collapsed, and its value went down in the market. All this occurred due to events all over the world. Here is a detailed data analysis about everything due to which the downfall of bitcoin occurred.
What Actually is Happening to Bitcoin?
Bitcoin grew at its level best and had a great boost in 2016. It started from $900 and saw an extraordinary growth up to $64,507 on April 14th,2021. It has shown a 634% increase since the last halving session. But then it started crashing extensively.
The cryptocurrency value went below $20,000 in 2022. This happened for the first time after 2020. This was a clear indication that the most valued crypto is going downstream. Bitcoin has crashed!
The prices then went low, up to $17,593 at a point. The value of bitcoin has reduced by 17% since it had its peak. This crash also affected the overall crypto market. The market was overall estimated to have assets valued around $3 trillion but have now decreased to below $1 trillion. To be precise, the value of the total assets of the crypto market is dangling around $850 billion. Crypto investors lost as high as $2 trillion within a span of 8 months.
Why is Bitcoin Losing Its Value?
Holes in the pockets are one of the major reasons behind the falling value of bitcoins. People do not have extra money that can be invested. Not only cryptocurrency, but all the markets of the world are also down during these years. The scores of the stock market all over the world have decreased by many points. The economies of different countries were sliding down. Covid-19 played a major role in it.
Global recession, panicking inflammation, and high-interest rates disturbed every house’s financial budget. There also comes higher living costs for common people. All these factors forced people to spend all of their income and left them empty-handed. This restricted them from any kind of investment.
During this period, people were unable to trust cryptocurrencies like bitcoin. As cryptocurrency is not physical money, it can be kept in a locker. The behavior of this digital money was unpredictable too, and its future of it was not that concrete. All these factors pulled common people away from the thought of investing in Bitcoin. This was a subject of huge risk for the common people. Rather the preference is to invest a little amount in gold.
Because of the fall of the stock market two years back, some investors sold their bitcoin because they thought of it as a high risk. This created an impact on the price of Bitcoin. A spark of loss was invisible on the graph. Looking at the situation worldwide, the decreasing value of bitcoin provoked all the investors to take their money out of it and sell their coins. This further led to heavy crashes and the collapse of Bitcoin in recent years.
Why Did The Crash Occur Now?
This year has shown some collapses that weren’t a very high ranged fall, but they had a huge significance. This had a huge strike on the minds of the investors. The overall confidence in the market went extremely low. This resulted in a panic! High-scale panic is widespread among investors all over the world.
Investors around the globe have grown fearful and skeptical thoughts about Bitcoin. Ingrown fear, they started getting rid of it. Investors sold their bitcoins. The worth of Bitcoin decreased when people started selling it extensively because this is how the trading market works.
As the value got down, people started selling it. With increasing sales of the coins, the value further went down. This loop continued and thus led to the collapse of Bitcoin.
Various Economists say that the value of this cryptocurrency is not constant, and it completely depends upon the people’s interests and desires. The worth will be decided by people’s willingness to pay for it.
Influence of Bitcoin On Other Cryptocurrencies
Bitcoin was the leading digital money in the cryptocurrency market when it was created. With gaining a bit of trust, the only path was toward growth. But in recent years, by observing the growth of bitcoin, several other companies started following the blockchain system and launched their own cryptocurrencies into the market. Ethereum, Tether, Binance USD, USD Coin, and many more are some of them.
This arrival of a different variety of cryptocurrencies into the crypto market also affected Bitcoin’s growth. The total centric investments on bitcoin were split and diversified in different cryptos—common people with small savings invested in different cryptos that were more trustable and steady options.
One of the largest trading cryptos, Binance, stopped the withdrawals of Bitcoins for some hours. The reason stated by them was a technical issue that was a “stuck transaction .”It also puts a direct effect on the system of Bitcoins.
Another well-known cryptocurrency lender, Celsius, also follows the same behavior as Binance. They suggested they had “extreme market conditions. “Due to their severe market state, they took the step. Some months back, Coinbase exchange also announced that they have to lay off their workforce by 18%. They blamed the downfall of crypto, saying it to be ” crypto winter.”
This spread a huge state of panic among the common people as they felt their money was stuck and they would lose it forever. Then, when the companies allowed transactions to come out of that adverse situation and made sure it happened again, people took out their money from Bitcoin and invested it elsewhere.
What Can Save Bitcoin?
Bitcoin has always gained its level due to people’s interest. It can come out of this extreme crisis if the existing investors keep their investment steady in the system. Adding up, the system requires more people to invest in them. In that way, Bitcoin will be stabilized.
Investors keep a close eye on the rates of Bitcoin. It becomes the best time to buy the coins whenever the prices go down. Investors can just buy it and keep it till the rates go up. Various Economists say the pump will occur soon, but everything depends upon the people and their desirability. Yet another factor called “The Merge” could save the crypto market altogether. Whether or not it’s true remains to be seen.
What To Do When Bitcoin Is Crashing?
Bitcoin or any other digital money comes with its main feature: volatility. Crashing of the crypto is a part of the process. This is included among all the high risks that come with the investment procedure of Bitcoin. Here are the points you need to keep in mind if you face a crypto crash happening right now!
Focus On Long-Term Return
Whenever you are investing in the Bitcoin market, make sure to look at the long-term profit. The system of crypto works to provide a higher return when the investment is kept for a longer period. You need to keep checking the price rise and fall of Bitcoins. Each day there is some percent spike, and focusing on that is essential. If your money is stuck in a crashing time, just give it time until the value goes up.
Don’t Sell When The Price Drops
When the price of Bitcoin goes down, it is the worst time to sell your coins. During this time, the return will be extremely minimal. Taking this sudden step will lead to losing good returns. You just need to wait till the price goes up, and then you can sell at a higher price and get a profitable return.
When the prices are low, and you don’t want to invest in a higher index, then the option of “dips” comes in. You can invest in the dips to get good returns in a short-term period. During the situation of falling rates, this will help to gain some amount of profit. But this is not a good option when it comes to long-term perspective. So make sure not to get into panic mode and sell suddenly when the rates are lower. Investing in dips will be a better asset.
Understand The Crypto Market
When the investors understand the whole Bitcoin crypto market and its algorithm, this will help better analyze the ups and downs of the coin value. By constant analysis, the right time to sell the coins can be decided. You can get better profit by understanding the core of investment.
In the last two years, the Bitcoin values have dropped significantly, leading to a crash. Not just Bitcoin, various other cryptocurrencies also saw a great downfall. Several factors led to this situation, like people were wrapped up in the cost of essential commodities, and there was nothing extra that they could invest. Other than that, Covid-19 and its effect had an extreme effect on the decreasing value of Bitcoin. This crash is predicted to dissolve if people keep investing and plant their trust in Bitcoin.