Last month, Bitcoin fell below the $20,000 mark before regaining momentum and slightly inclining in value, however, the biggest cryptocurrency coin is now floating between the $18,000 to $19,000 mark.
It has been a difficult year for bitcoin investors with the coin having declined substantially by nearly 70 percent from its record high of $68,990 in November. So far, the Federal Reserve has made two interest rate hikes in an ongoing effort to curb inflation. During the Covid-19 pandemic, low interest rates and government stimulus contributed to elevating cryptocurrency prices, lately however, prices have dropped substantially.
High rates of volatility is seemingly triggered by Jerome Powell’s US Federal Reserve commitment to tighten policies in an ongoing inflation combat. Powell said he expects the central bank to continue raising interest rates in a way that will cause “some pain” to the US economy, to bring down inflation which hit a 40-year high. Mainstream cryptocurrencies like Bitcoin, Ethereum, and BNB have taken a steep dip over the last 24 hours.
The sudden plunge is a cause of rising concern, “With the tight correlation between US equities and crypto in recent months I suspect this has filtered through to crypto markets and it’s why we are seeing the sell-off. The trend has also perhaps been exacerbated by liquidation of long positions on bitcoin perpetual futures markets.” Simon Peters, crypto market analyst at eToro, told CNBC.
While this doesn’t yet match the severity of the 2018 crash, in which Bitcoin lost 80 percent of its value, experts say things could still get worse for those left holding BTC. “buy the dip” is a principal based on an assumption price drops are temporary aberrations that correct themselves over time. Dip buyers hope to exploit dips by buying at a relative discount and reaping the rewards when prices rise again, this month, Reddit co-founder started a crypto fund looking to raise $177 million by buying crypto assets at what they described as ‘discounted rates’.
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