Bitcoin, the world's most popular cryptocurrency, has been facing a downward trend in recent months due to several factors, including rising inflation, geopolitical crises, and changes in US monetary policy. In the US, these factors have been driving additional short-term volatility in the cryptocurrency and stock markets. Until recently, Bitcoin was considered a store of value that was somewhat immune to fluctuations in the value of risky assets. Now, however, BTC has become vulnerable to the same types of factors that move the value of other risky assets, such as inflation, stock markets and the Fed's monetary policy. For example, when Bitcoin starts to fall, most altcoins also experience volatility.
Anything from negative press to government crackdowns can trigger a chain reaction leading to a crash in cryptocurrencies. It appears that the Luna Foundation Guard was attempting to shore up UST with Bitcoin before the weekend happened. This has caused fear that Luna Foundation Guard will sell a large part of its Bitcoin holdings to shore up its weakened stablecoin. The recent falls have been caused by Tesla's 180-degree turn in the acceptance of Bitcoin as payment for its products and China's crackdown on initial coin offerings, blocking of exchanges and warnings against speculative trading. Many investors see Bitcoin's price swings as part of the game, but “volatility is difficult for individual investors to handle” according to Noble.
XRP, Cardano, Terra, Dogecoin and Shiba Inu each lost 2 percent, while Ethereum and Bitcoin fell by around 1 percent each. An analysis by data firm Arcane Research has revealed that since the beginning of this year, Bitcoin's price movement has closely mirrored that of Nasdaq, a benchmark that is heavily weighted toward tech stocks. Bitcoin is now worth half the value it was just six months ago when it hit a market high of £51,000 per coin on Nov. 10th 202. Terra (LUNA) has also plummeted after a major 96% drop. China dealt another blow when it ordered the complete shutdown of Bitcoin mining in its Sichuan province and told banks to stop supporting cryptocurrency transactions in a latest wave of crypto restrictions. To receive payments in Bitcoin or any other cryptocurrency, you need to create a free account on cryptocurrency exchanges.
As digital assets have become more popular, however, the amount of energy needed to generate Bitcoin has skyrocketed. Bitcoin supporters see it as a diversifier in balanced portfolios but it did not do better than stocks at the start of the coronavirus pandemic. Bitcoin can be synonymous with crypto as it was designed as an independent virtual currency that could also be a protection against inflation. However, its volatility is causing uncertainty in the cryptocurrency market which has forced investors to make difficult decisions with their portfolios. The environmental impact of Bitcoin mining has also caused Tesla to withdraw this option for customers. Bitcoin wasn't the only cryptocurrency that felt the initial effects as most of the top 10 experienced declines in value.
