As the price of bitcoin plunges under $30000, the altcoins are no better. LUNA and Terra are down by nearly 50% in the past day. Both of these coins were affected by the recent drama and the gloomy market conditions. This article will explain why Bitcoin has declined so dramatically. Firstly, it will explain that interest rates are falling and investors are flocking out of speculative financial assets.
Bitcoin falls below $30,000 for the first time since July 2021
The world’s biggest digital token fell below $30,000 on Tuesday, a milestone it hadn’t reached since July 2021. The plunge in the world’s most popular digital currency followed the rise in interest rates, which is sending investors fleeing global markets. Bitcoin dropped nearly 3 percent in Asia before regaining some ground in Europe. Ether, Solana, and Avalanche all saw losses, but the largest digital token’s value remains higher than it was just a few months ago.
Ether recovers sufficiently to make a small gain
The crypto markets have been under a lot of pressure recently due to the ongoing economic events and surging inflation. This is especially true with the recent events stemming from Russia’s invasion of Ukraine. Bitcoin, one of the leading cryptocurrencies, started the week on a down note, trading around $30,900. This is its lowest level since July 2021.
Investors flee speculative financial assets as interest rates fall
As interest rates begin to fall, investors are running for the hills. While most financial institutions and individuals have moved to safe and stable assets, others have turned to risky and speculative investments. Speculative assets have risen in price due to a lack of liquidity. Some investments are highly risky, such as virtual real estate. While it may seem tempting to buy these illiquid assets, the dangers are too high, especially if you have no money to invest.
Bitcoin’s decline follows dive in US equities
US equities suffered their biggest weekly loss in four years on Wednesday, with the Dow Jones Industrial Average declining a thousand points and the S&P 500 Index joining it in correction territory. Investors are fleeing risk amid concerns over rising inflation and slower global economic growth. Worries about energy demand also pushed gold prices down. Bitcoin’s decline followed, slipping to its lowest level since July 2021. Bonds rose and yields on U.S. Treasurys eased after hitting three-and-a-half-year highs, as traders prepare for this week’s consumer price data and $103 billion in government debt auction.
Other cryptocurrencies also under pressure
Bitcoin is not the only cryptocurrency under pressure. Bitcoin Gold was hijacked in May by unknown hackers, and exchanges lost $18 million. It was delisted from Bittrex after the exchange refused to compensate the victims. The widespread adoption of cryptocurrencies also has many critics. While many have praised the new digital asset, they are wary of its inherent risks. Here are some things to watch for. And don’t be surprised if the price of Bitcoin Gold falls in the future.