Back in December 2021, the Bitcoin rate was a historical maximum of $69K, but over the following months, a gradual decline began, and by February, the rate had almost halved. Then Bitcoin grew and in May, its rate fluctuated smoothly from $40K to $50K and back.
The turning point came in June, when Bitcoin, which had been holding at $30K, plummeted, and with it, Ethereum and other currencies flew into the abyss. Interestingly, the capitalization of the entire crypto market for the first time since the spring of 2021 dropped to less than a trillion dollars.
The main reason for this crisis, experts say, are external factors - in particular, rising inflation. "The crypto market has been under pressure from the Federal Reserve raising interest rates over the past months to fight inflation," says Edul Patel, CEO of crypto investment platform Mudrex, in the Financial Express.
"Investors panicked, and the number of currency withdrawals in recent days has increased dramatically. Most likely, the downward trend in the rate will continue for the upcoming few days," Patel adds.
In fact, the history of the economy knows many examples of sharp collapses in any markets - from foreign exchange to even the market for such a stable commodity as gold. In any case, the economy of the modern world is such a self-regulating thing that sooner or later, everything will return to normal.
It is a pity, however, that many investors have now lost a lot of money. But at the same time, now we have a lot of great memes instead.
The main problem is that in the diverse market of cryptocurrencies, Bitcoin and Ethereum have long been a kind of analogue of the dollar and the euro, that is, reserve currencies. Investors who wanted to stabilize their portfolio could always convert some of their assets into these currencies, so now their protective properties are being highly questioned.