Being super volatile, the cryptocurrency is falling again as bitcoin dropped to its lowest level of $19,843 on August 29, 2022. Since hitting its all-time high of $65,000 in November 2021, this is the lowest it has ever dropped.
Consequently, according to crypto-currency market fundamental analysis provider, CoinGecko, the global market capitalization of cryptocurrencies has fallen below the $1 trillion mark today, as it has fallen more than 2 percent to $994 billion in the last 24 hours.
Investors are always wondering about market volatility and live in a cloud of fear, they tend to look for the cause of this decline. However, there is no particular reason coming from the crypto world itself, as it does not depend directly on the stocks of the industry, but fluctuates based on the assumptions of the stakeholders.
Reacting to the ongoing Bitcoin crash, Unocoin co-founder and CEO Satvik Vishwanath said: “The fall in prices is not limited to Bitcoin or the crypto sector, but is seen across all major asset classes. Added to this are fears that around 137,000 bitcoins from Mt Gox’s bankruptcy filings could be thrown into the market immediately, forcing investors to be very cautious. This should be seen as a test of time for long and medium term investors.”
“Depending on their own portfolio, this could be an opportunity to average out the value of their digital assets. Intraday traders should not be influenced daily. Higher risks exist for short-term investors as it is too difficult to say if even the current price will hold for the next two weeks. The related developments do some damage to spot pricing, but I doubt it will lead to a long-term dent,” Vishwanath added.
Reasons for the fall
Not one, but there are many factors that can be the reason for the constant drop in the capitalization of the global cryptocurrency market. Because the first half of the year was full of unprecedented events, from the Russian-Ukrainian war to the increase in US repo rates.
The Russian-Ukrainian conflict rocked the global economy as major economies faced persistent inflation and consequently increased their respective repo rates. For example, the US Federal Reserve has already raised interest rates by 150 basis points in 2022 and is likely to raise rates by another 200 basis points in the remaining months of 2022.
Consistently, the Indian RBI has also been raising repo rates, and the latest rate hike has increased the total number of rate hikes since May to 140 basis points. This, along with the taxation of virtual digital assets, is influencing cryptocurrency trends around the world.