Bitcoin took a brutal fall on Monday, briefly dipping below $30,000 for the first time since July 2021. The world’s largest cryptocurrency is now worth less than half of what it was in the fall. Other cryptocurrencies, like Ether and BNB, have seen similar falls, while trading volumes have also tapered off on major exchanges. Some experts are now warning of a “crypto winter,” in which the sector’s astonishing growth is replaced by an extended period of contraction.
The current slide of Bitcoin and other cryptocurrencies is being caused by a combination of short-term and long-term inputs, including larger financial markets and the crashing of a major stablecoin. Here are some of the main factors leading to the current slump.
Bitcoin is connected to the rest of the financial market.
Crypto evangelists have long hoped that the independent nature of crypto would make it resistant to inflation and crises. Bitcoin, the number one cryptocurrency, has no central issuer or authority controlling it. That independence from government, many argued, should ensure that Bitcoin would hold its value through economic dips, international wars or drastic policy changes.
But the last couple of years have proven this is false. When the coronavirus pandemic crushed global markets in March 2020, so too fell Bitcoin, falling by 57%. Stock markets and cryptocurrencies then both recovered and rose at a staggering rate, which analysts believe was caused by a combination of free time, disposable income, and pandemic-relief money pumped into the world by governments.
But lately, investors have been wary that change is in the air, as inflation led the Federal Reserve and other central banks to raise interest rates. For investors looking for a safe port, Bitcoin, which swings wildly by nature, may…
Source : time
