HIGHLIGHTS
- The crypto market hit its lowest market capitalisation recently
- Bitcoin is trading at its lowest since December 2020
- Analyst are citing global inflation as the main reason for the meltdown
Investors are in a frenzy as a result of a variety of cascading red graphs on different cryptocurrency exchanges. Many investors who were hoping to profit quickly from the digital currency have had their expectations dashed by the current crypto collapse.
Not only has the value of cryptocurrency seen some of its worst months, but it has also misled devoted investors who believed that these assets could provide them with some economic stability.
Let's look at some of the causes of this cryptocurrency instability, the harm it has caused both investors and exchanges, and some of the things to watch out for in the coming days.
AS THINGS STAND
One of the finest years for cryptocurrency investors was 2021. In November 2021, the price of one bitcoin reached an all-time high of $69,000 (about Rs 54.5 lakhs), while the market capitalisation of all bitcoins at the time was just under $3 trillion. Before the end of the year, analysts and cryptocurrency enthusiasts predicted that Bitcoin will surpass the $100,000 threshold. They had no idea that things were about to get much worse.
The crypto market fell below the $2 trillion level in January 2022, and after that, everything went downward, with the exception of a minor comeback in April. The largest cryptocurrency in the world, Bitcoin, is currently trading at $19,165 (about Rs. 15 lakhs), down 8.47% over the past week. This is almost at the lowest point in a long time.
In total, it has lost about 70% of its value since hitting an all-time high in November of last year, while other tokens like Dogecoin, Avalanche, and Solana, among others, have suffered losses of up to 90%. The market capitalization of all cryptocurrencies as of right now is $860 billion.
WHERE CRYPTO CAME FROM
Global inflation is viewed by many professionals who have been commenting on and writing about the cryptocurrency field for years as one of the main architects behind the industry's poor predicament.
But how did it end up here? Why is Bitcoin, a virtual currency that was predicted to be the next big thing, currently on thin ice with a hazy future? What lies in store for cryptocurrency investors in India and throughout the world?
One of the biggest increases in interest rates in 28 years has been made by the US Federal Reserve in an effort to escape the recession trap. A 0.75 percent increase may have originally not bothered the crypto market, but many market analysts think it has increased inflation rates.
Even the stock market has entered the bear zone, which denotes a 20% decline from its most recent high. The Nasdaq has plunged 33 percent in 2022, while the S&P 500 has fallen by more than 21%. With the Nifty50 down 15% from its all-time high (18,604.45) in October 2019, India is also feeling the effects of this persistent inflation the most. It is obvious that inflation has contributed to the demise of cryptocurrencies, and a lot of people are becoming wary of the idea of investing in such erratic assets. The perception of cryptocurrencies as investments has significantly shifted.
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