How Much Has Bitcoin Devalued From Its All-Time High?

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Despite some sort of comeback on Monday, Bitcoin investors have had some of the worst weeks in their investing journey. From a high of $69,000 in November, the cryptocurrency crashed to $32,951 last week, its lowest value since last summer.

And it’s not just Bitcoin that has fallen; many other cryptocurrencies have been affected by the crisis. Ethereum, a common crypto for NFT users, is also at its lowest level since July, falling from over $3,290 on January 20 to $2,389 just five days later.

These developments have investors wondering why the market is so bad for crypto right now.

What caused the accident?

Geopolitical elements such as rising tensions between Russia and Ukraine, as well as the announcement of a reduction in economic stimulus by the US Federal Reserve, spooked investors in a multitude of markets.

“As the committee is likely to signal its exact plans for the interest rate hike, many investors in the digital currency ecosystem will likely start betting on safer assets, thereby pulling funds out of crypto. Given that the growth trend is now highly correlated to the stock market, any sign of a potential recovery will depend on a broader stock market correction,” Alexander Mamasidiov, co-founder of mobile digital bank MinePlex, told The Independent.

Were cryptocurrencies too expensive? 2021 has seen currencies at their highest ever market value. Moreover, it is in the nature of cryptocurrencies to be volatile. There is no rhyme or reason for its crashes per se, unlike a traditional currency which will be affected by commodity prices or wage growth. Bitcoin has suffered severe crashes in the past, with four other crashes of over 50% in market value in the past eight years.

Nations have also started cracking down on crypto with new or proposed legislation. The United States is expected to introduce legislation to regulate crypto, as is Russia. Other countries, such as the UK, are introducing more measures against its advertising, to try to bring it into line with current gambling information.

Despite the unrest, El Salvador’s President Nayib Bukele doubled his support for the currency. Last year, the country introduced Bitcoin as legal tender. Amid the crisis, the government purchased 410 bitcoins for $15 million.

Most people enter when the price is up, but the safest and most profitable time to buy is when the price is down. It’s not rocket science 🤷🏻‍♂️

So invest some of your McDonald’s paycheck in #Bitcoin

Now go back to flip more burgers, you lazy fvçk!

— Nayib Bukele 🇸🇻 (@nayibbukele) January 24, 2022

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