Bitcoin, the world’s first decentralised cryptocurrency, has now plunged. There could be many reasons why the price of Bitcoin has declined significantly from its all-time high.
Where is Bitcoin now?
In early 2018, the price of bitcoin was hovering around $13,000, a significant drop from its all-time high of $19,783.06 reached in December 2017. However, in 2019, the price of bitcoin began to rebound, climbing back up to around $10,000 by the end of the year. This upward trend continued into 2020, with the price reaching around $12,000 by the summer and then surging to $18,000 by December.
The price of bitcoin continued to be highly volatile in 2021, with a sudden drop in early January and then a steady climb through the rest of the year. By December 2021, the price of bitcoin had reached $30,000. Nowadays, one Bitcoin worth is around $17,000, which was around $69,000 in November 2021, and then it reached $47,000 in January 2022.
Why is Bitcoin’s price dropping?
Bitcoin started 2022 on a positive note, but certain unfortunate affairs brought too many swings in the cryptocurrency’s price, which made BTC crash over the past year. Here are some possible factors that could cause Bitcoin’s price to fall:
- Rising inflationary fears:
Rising inflationary fears have a significant impact on the value of Bitcoin Currency and other cryptocurrencies. Inflation is a measure of the rate at which the overall level of prices for goods and services is rising. When inflation is high, the cost of living increases and consumers have less purchasing power. This led to a decrease in demand for goods and services, which in turn led to a decrease in the value of assets such as Bitcoin.
- Uncertainty due to rising interest in the U.S. and the U.K:
Uncertainty due to rising interest rates in the United States and the United Kingdom had a significant impact on the value of Bitcoin. Higher interest rates make it more attractive for investors to hold fiat currencies, which has led to a reduction in demand for Bitcoin. Additionally, rising interest rates can also lead to increased volatility in the stock market and other financial markets, which also impacts the value of Bitcoin.
- Terra-Luna crash:
The “Terra-Luna crash” refers to the failure of the Terra-Luna project, a cryptocurrency project that aimed to create a stablecoin pegged to the value of the moon. This project impacted the BTC price and investors’ confidence to invest in the broad crypto market. Additionally, the Terra-Luna crash also led to increased regulatory scrutiny of the broader cryptocurrency market. Regulators become more concerned about the risks associated with investing in cryptocurrency projects and take steps to increase regulation of the market. This led to increased costs for cryptocurrency businesses and made it more difficult for new projects to launch.
- The collapse of the largest global cryptocurrency exchange, Future Exchange (FTX):
FTX is one of the most popular and widely used cryptocurrency exchanges in the world, with millions of users and a large volume of trades. The collapse between FTX and Binance, led to a decrease in demand for Bitcoin and other cryptocurrencies, as investors lost access to a major platform for buying and selling BTC. This showed a decline in the price of Bitcoin and other cryptocurrencies, as the supply of digital assets exceeded the demand.
- System of taxation:
High taxes on digital currencies make it less attractive for individuals and businesses to use and invest in them. Leading to a decline in demand for digital currencies and their value. The government imposed a high capital gains tax on Bitcoin, which discouraged individuals from buying and selling digital currency, leading to a decrease in demand for its price. Governments should strive to create a clear and consistent tax regime that encourages the use of digital currencies while protecting investors and preventing fraud.
Bitcoin’s price is plummeting nowadays due to the FTX’s downfall. Furthermore, many other factors have contributed to the recent decline in the price of bitcoin, including increased regulatory scrutiny, increased competition from other cryptocurrencies, hacking attacks and security breaches, market corrections, and profit-taking. However, it’s important to keep in notice that the cryptocurrency market is highly volatile and that prices can fluctuate rapidly.