VALUE OF BITCOIN DROPS BY 50% SINCE PEAK IN NOVEMBER

Mon 09 May 2022:

Bitcoin has become more volatile recently. Its worth seemed to have been steadily declining during the weekend. According to the Coinbase cryptocurrency exchange, it has dropped below $34,000 (£27,630).

This cryptocurrency, which is actually the world’s largest by market value, has plummeted by 50% from its peak in November last year.

This comes as the stock markets around the world are facing a hard time and have been going down recently.

Some Asian markets may witness downward trend again on Monday as Japan’s benchmark Nikkei index is down by around 2%.

With a value of $636bn, Bitcoin seems to account for around a third of the whole cryptocurrency market.

The second biggest cryptocurrency in the world, Ethereum, has also been in dire straits and has gone down by over 10% last week.

This downside in the value of digital assets has become a huge reason to worry for investors. So, it is a time to tread cautiously.

In earlier years of the cryptocurrency market, the volatile trading was not unusual in digital assets.

For most of the 2022, it had been relatively quiet though.

With more traditional investors trading digital assets, cryptocurrencies have increasingly followed the movements of global stock markets.

Many of the institutional investors that buy cryptocurrencies treat them as risk assets, similar to technology stocks.

In times of market uncertainty traditional investors will often sell what they see as riskier assets and move their money into safer investments.

Last week, central banks around the world, including the US, UK and Australia, raised interest rates as they attempt to tackle rising prices.

The US Federal Reserve raised its key lending rate by half a percentage point, marking its biggest rate hike in more than 20 years.

That has triggered more concerns among some investors that inflation and the higher cost of borrowing could have a major impact on global economic growth.

Investors are also worried about the impact of the war in Ukraine on the world economy.

Meanwhile, in the last year Bitcoin has become legal tender in two countries – El Salvador and the Central African Republic.

Since El Salvador said it would allow consumers to use the cryptocurrency in all transactions, alongside the US dollar, the International Monetary Fund has urged it to reverse its decision.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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