Media Release
Jan 31: Bitcoin (BTC), the leading cryptocurrency by market capital, has fallen continuously over the last three days. The new value sees it rank below $60,000. Over the last seven weeks, Coinmarketcap.com reports that top coins such as Bitcoin, Ethereum (ETH) and Dogecoin (DOGE) have shed over 10 per cent. Bitcoin reached its peak on November 15 with $66,281.57, while falling below $60,000 on November 17 for the first time in seven weeks.
According to Republicworld.com, the overall crypto market cap dropped from 2.6 trillion dollars on Friday to 2.07 trillion dollars on Saturday. During a very brief period last month, the total value of the market reached $3 trillion.
Bitcoin has dropped to $45, 000 this Sunday morning after falling to $48,000 on Saturday from its record high. This sudden drop represents a 14.2% drop in the valuation of bitcoin in the last quarter. There seem to be several factors at play in this case, but it is always hard to pinpoint the exact cause of the drop. We are going to examine the factors that are perceived to have caused this sudden collapse.
Factors that affect the value of Bitcoin
Federal Reserve Talk
Investors have become shocked by speculative assets after the first weakness in plain vanilla stocks, partly caused by Fed taper talk. A famous investor, Louis Navellier, has warned, " that tappering from theUS Federal Reserve's could burst the Bitcoin bubble."
As a result of the Fed's tapering, Navellier said the price of Bitcoin could drop below $10,000. He also warned that the Fed would create a correction in risk assets.
China and the US may have played a role in driving Bitcoin prices down
The Chinese government aims to eradicate crypto mining from the country by cracking down on it. State-owned companies that deal in virtual currency and bitcoin mining will be cleaned out, China Global Television Network reported China's National Development and Reform Commission (NDRC) as saying, “Virtual currencies have no legal status like legal currency.”
Additionally, the US SEC rejected a spot bitcoin exchange-traded fund, which would have likely flooded the crypto market with billions of dollars. At an event at the White House on Monday, Joe Biden signed the US Infrastructure Bill that includes new crypto legislation requiring brokers to issue 1099-Bs to the IRS. The gains will now be noticed and there will be tax implications, which has triggered a reaction in the market.
"A combination of factors, including China's crackdown on cryptocurrencies, profit booking and tax provisions for US infrastructure legislature may be the reason for the fall in Bitcoin and other cryptocurrency value," says Kumar Gaurav, CEO and Founder of cryptocurrency platform Cashaa.
Gaurav says that regardless of the cryptocurrency used, investors must understand what the project represents before making an investment decision.
There are many factors that is affecting the value of cryptocurrency in the industry currently. Read up on the factor when you visit Yuan Pay Group. They have lots of information for your consumption.
New Covid-19 Variant
The new Omicron variant, the uncertainty concerning its severity as well as the power of vaccines, which is largely unknown is making investors put their money somewhere else which is causing a crash in value.
The Holiday Season
Also, it is that time of year. Knowing that the year is about to end, many investors want to take gains from the market. Even with the decline, BTC is still up 66% for the year so far where it started the year at around $29,000.
Bottom Line
What is the next step? That's always a challenge. There'll be a lot of snow this year for sure. Does that mean a crypto winter as well? As a guess, I would say that the severity (or lack thereof) of Omicron could play a significant role.