The price of one Bitcoin peaked in November 2021 at over US$67,000 per unit. Its current value, which is the lowest in 18 months and less than half of its peak, is less than US$25,000.
While the value of Bitcoin had decreased over the previous five days by about 24.47 percent, it had increased by about 1.15 percent at the time this article was written. Each unit is currently valued at about $22,265 dollars.
Bitcoin is a risky investment for many due to its erratic ups and downs, and the recent cryptocurrency market crash has caused many devoted crypto owners to return to their cash holdings. What gives, though?
Not just Bitcoin, either. Recently, there has been a sharp decline in the value of all cryptocurrencies.
The market capitalization of cryptocurrencies fell to $977 billion as of June 13, 2022, a drop of about 12% in a single day.
Although the market value of alternative cryptocurrencies, or altcoins, has never been as high as that of the well-known Bitcoin, the current situation is the worst ever.
At around $1188 per unit right now, the price of Ethereum is at its lowest point in more than 14 months. Solana’s price has dropped even more dramatically; it is now around $27 per unit.
According to reports from CoinDesk, a global data platform for digital currencies, other altcoins like XRP, Binance USD, and Cardano are currently valued at about $0.31, $1, and $0.49, respectively.
The value of altcoins may decrease even further as a result of impending regulatory restrictions, and many smaller altcoins may go extinct, according to reports.
Why is cryptocurrency’s value decreasing?
According to international experts, investors no longer view cryptocurrencies as a safe and reliable investment.
The US Federal Reserve has been exerting pressure on the cryptocurrency market, claims Edul Patel, co-founder and CEO of the international cryptocurrency investment platform Mudrex. Recently rising interest rates have been correlated with rising inflation.
According to Patel, popular cryptocurrencies like Bitcoin and Ethereum suffered significant losses as a result of a sell-off that occurred after data revealed that US inflation had reached its highest level in 40 years.
The value of cryptocurrencies will continue to decline, according to Patel, who also forecasts that this downward trend will last for a few more days.
The CEO of an Indian cryptocurrency exchange company, BuyUcoin, Shivam Thakral, agrees that the main reason for the decline of cryptocurrencies is due to global inflation. He claimed that the consumer price index had just revealed the highest inflation since 1981, which would be disastrous for the current cryptocurrency market because it would discourage more people from making investments in cryptocurrencies.
Considering that the majority of the world’s nations have high rates of inflation, investing in cryptocurrencies is risky for everyone, but especially for international investors.
Why people continue favor cash
Cash continues to be preferred over cryptocurrencies in large part because of their volatility.
For instance, even something as routine as purchasing coffee can carry unforeseen risks. “If you spend $3 on coffee today, your Bitcoin might be worth $30 tomorrow. What a terrible loss, “According to Time, Ollie Leech, editor at the international cryptocurrency news site CoinDesk,
Cryptocurrencies by their very nature are unpredictable. It is challenging to predict what the actual monetary value of a unit of cryptocurrency might be over the course of an extended period of time because cryptocurrencies operate on a peer-to-peer, decentralized system.
The value of fiat currency, or money that has been issued by the government and is controlled by a single national authority, is typically more stable than that of a cryptocurrency. While it’s true that fiat currency is also subject to price fluctuations, these shifts tend to be less pronounced than those that occur with cryptocurrencies, which can have wildly different effects depending on user preferences around the world.
Despite the fact that cryptocurrency can be helpful for some international transactions and frequently offers greater online security based on related blockchains, government-backed fiat currency is ultimately more preferable due to the asset protection and custody it offers.
The goal of cryptocurrency, according to TradeStation, a global provider of brokerage and online trading services, is to cut out middlemen, boost cost effectiveness, and advance customer access and control. However, it still is unable to offer the same level of national security and price stability as fiat currency.
The bigger picture of why many people would prefer returning to traditional forms of payment becomes clear when you take into account all these factors and the fact that there is absolutely no guarantee that cryptocurrencies will continue to be a trustworthy source of financial value in the future.