After this crash, Bitcoin matched its December 2020 levels, after which it rebounded to just above the $29,000 mark.
The rise of inflation, increase in market volatility and uncertainty, and the recent geopolitical tensions have dramatically impacted the price of Bitcoin, even more so than expected.
Terra’s native token LUNA, which was trading at $119.18 in April, is now trading at $0.01, having lost 99% of its value in just 24 hours.
The current decline is due to the combination of several short-term and long-term inputs, factors and the situation of financial markets.
Bitcoin and the Financial Market: The recent geopolitical events and their impact on crypto prices have demonstrated that cryptocurrencies are not independent in nature, i.e., they are not resistant to crisis and inflation.
TerraUSD , a non-profit organization that supports the Terra Blockchain, tried to protect the UST dollar peg by buying more and more Bitcoin reserves.
Recent Changes in Regulations: Since the value of cryptocurrency is not tied to any physical or tangible asset, it derives value mostly from what people believe its value to be.
On the other hand, crypto investors have been shaken due to the increasing number of crypto fraud and hacks where people have lost significant amounts of money.
Since 2009, Bitcoin has plunged and surged several times in which investors either lost interest or flooded the market.
If you are thinking of investing in Bitcoin now, you are speculating that the value of Bitcoin will rise again, and you will be able to sell at a higher price.
On 12 May 2022, Bitcoin witnessed a dramatic plunge in which it hit its 24-hour-low of $25,402.
However, experts still say that Bitcoin may cross $100,000 this year at some point, even after the recent drops.
They are supposed to be a ‘safe’ crypto asset and protect their investors from the high volatility of cryptocurrencies.
The largest cryptocurrency is now less than 50% of what it was in fall 2021.
Due to the recent tensions and accompanying inflation, investors are looking for a reliable port where they can protect their investments.
In an aggressive attempt, LSG bought $1.3 billion worth of Bitcoin last week, making its Bitcoin reserves worth $3.5 billion.
For instance, when the Chinese government banned all crypto mining activities in June, the value of Bitcoin fell from $65,000 in April to around $35,000 in June.
Additionally, mainstream crypto adoption has been slow, so it has become even harder to motivate people to invest in cryptocurrencies.
People have been amazed by the rate they can make and lose money through cryptocurrencies.
Cryptocurrencies are still a highly volatile and risky asset class, so you should never invest more than what you can afford to lose.