AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights
Bitcoin started the year 2022 on a bleak note and has been going through a rough patch. The digital currency experienced a roller-coaster ride in 2021, with wild price swings.
Investors had high hopes for Bitcoin’s rise in 2022, but they have been left disappointed by the crypto’s lacklustre performance.
However, volatility is one of the most distinguishing characteristics of the crypto market and it is crucial to understand the market cycle. Bitcoin has been trading at substantially lower levels since December of last year.
As of now Bitcoin has broken below the US$ 37,000 mark and is down around 50% from its peak of anearly US$69,000 seen last November.
Recent Article: What is cryptocurrency and why is it so popular?
What’s behind Bitcoin’s wild price fluctuations?
Multiple factors have caused Bitcoin’s price to fluctuate throughout time. In this article, will talk about both positive and negative factors that influence Bitcoin’s price oscillations.
Positive factors
- In March 2021, Morgan Stanley became the first major US bank to provide Bitcoin funds to high-net-worth individuals. However, the bank limited their Bitcoin investment to only upto 2.5% of their overall net worth. The decision was made in response to clients’ requests for exposure to cryptocurrencies.
- Tesla boss Elon Musk stated in June that Tesla will most likely resume Bitcoin payments once more than 50% of its energy consumption is derived from renewable sources.
- In addition, El Salvador became the first country to adopt Bitcoin as legal tender in September last year, making it the widely accepted form of payment for products. Although El Salvador is the smallest country of Central America, its acceptance of Bitcoin seems to have influenced crypto investors.
Also Read: Why is the crypto market so volatile?
Negative factors
- China has outlawed payment firms and financial institutions offering services linked to cryptocurrency trading and cautioned investors against participating in the market.
- The Russian central bank has suggested a total ban on cryptocurrency in the nation. Cryptocurrency usage, mining and trading are all prohibited under the proposed prohibition. When fully implemented, the law will only permit the possessing of cryptocurrencies in Russia, with no additional activity permitted.
- UK banks have halted transactions to cryptocurrency exchanges, citing growing concerns that the sector has become a hub for financial crime.
- US law enforcement officials confiscated nearly US$2.3 million in cryptocurrency pegged to the ransomware attacks perpetrated by a Russian inhabitant.
- Furthermore, UK’s Financial Conduct Authority (FCA) has instructed cryptocurrency exchange Binance to halt all regulated activity within the nation, citing a lack of authorisation.
- Elon Musk said in May 2021 said that Tesla would no longer accept Bitcoin’s payments, because of environmental concerns.
Also Read: Keen on crypto? Here are some top cryptocurrency trading apps
Last thoughts
As the crypto market is fickle, no one can predict how long Bitcoin’s harsh hammering will last. If at all you decide to invest in the digital asset, make sure you can stay invested for long and are only putting that much, which you can afford to lose.
Recent Article: Is investing in cryptocurrency a good or bad idea?
