The bitcoin price went into a drastic fall as it lost more than one-fifth of its value over the weekend before it was floating above $50,000 (£37,720). It happened only a month after it reached a record high.
The cryptocurrency was valued way above $68,000 in November. While experts were predicting it would grow to further heights with the year coming to an end, it swept a wave of concern for the value of traditional assets such as government debt and gold.
Investors and analysts, including JP Morgan and the Wall Street bank, see bitcoin as a hedge against inflation after inflation rose in significant economies, including the US and the UK.
Earth’s most potent and most prominent digital currency, which reached a staggering market cap of $1.1 trillion before the weekend’s drop, has been struggling to maint momentum since the past few months after it reached its all-time high.
Bitcoin had a bad start on Saturday itself as it fell by 22% from $53,890 to a low of $41,967 before getting a little stable over the day. On Monday, it was trading around $48,600, and it was the lowest price since October.
Lately, the crypto market has stood very volatile and shown drastic change in recent months, but it is more profitable than five years ago when a single coin was bought at $700.
The experts at UBS banks are blaming the weekend fall on many different factors. However, it also could have happened as the Leaders of Crypto Exchanges faced questions from a US congress committee on Wednesday.
The analysts commented that supporters majorly hold cryptocurrencies as it is helpful for portfolio hedging. Still, the market’s swing over the weekend supports their views that it is a highly speculative risk asset. Regulation is still a critical decision in the winds, and thus the impact is shown on the retail customers.
The experts at AJ bell say that bitcoin has taken a fall before and can handle this one. As Bitcoin started plumbing down, Altcoins started to reflect it, as Ethereum was more than $4,600 on Friday, but it fell to a whopping $4,000 on Monday afternoon while barely staying afloat over the mark.
Bitcoin was founded after the 2008 financial crisis, and Bitcoin allowed regular people to bypass banks and different traditional payment methods. This feature made it most powerful and preferred among thousands of cryptocurrencies.
All cryptos rely on “blockchain” technology; it has a shared database of transactions with encrypted and confirmed records. The whole network is secured by “miners.” These miners use high-powered GPUs to verify transactions; they get crypto offered as a reward.
Almost over 18 million bitcoins are circulating in the market, all governed by a mathematical system controlling the creation of new coins. It is all happening on a decentralized platform, thus being a prick to institutions such as the central bank. Bitcoin is finite, and there are solely 21 million coins.