Bitcoin slips below $20,000; cryptocurrency market to remain unstable
Bitcoin, the most common cryptocurrency’s value fell by an average of 12% and with this the global cryptocurrency market too felt the jolt, thereby reaching its lowest point this August. Bitcoin was trading at $19,850 at 12:35 pm (IST) on August 28, at the time of filing this report. It should be noted this is below June’s closing price. “The crypto market is not immune to the general volatility like in the broader equity markets. In addition, the number of collapses we have seen in crypto in the last few weeks and months – from the collapse of Terra Luna to the bankruptcy of crypto hedge funds like Three Arrows Capital – have made retail investors very wary of staying in this space,” Kunal Chowdhry, CEO, Apollo Singapore investment told FE Digital Currency.
Meanwhile, experts attribute the stance of the Federal Reserve on monetary policy as the primary reason behind the fall of Bitcoin. “The increase in the interest rates and conservative monetary policy adopted by the Federal Reserve is proving detrimental to the entire cryptocurrency domain including Bitcoin, Ethereum, and XRP among others,” Tushar Gandotra, co-founder, CEO, FiEx, said.
Further, with cryptocurrencies and tokens being very volatile, industry experts opine that the sector would continue to witness some sort of unstability. “The macroeconomic factors such as inflation, employment rates, and interest rates are not showing substantial signs of recovery. Due to this, all the global markets are affected,” Arpan Shah, founder, Prosppr, a crypto investment company added.
Moreover, it is believed that the $20,000 mark provided support for Bitcoin when it hit its lowest in recent months; it had not fallen below $20,000 before Saturday. Meanwhile, many analysts have identified $20,000 as a crucial level for Bitcoin, yet levels of support may also be lower. “Cryptocurrencies are very volatile as they are a part of an unregulated law system. The fall in the crypto market can be even observed based on tweets of influencers,” Anshul Agarwal, founder, director, XR Central, said.
Cryptocurrencies which were trading at $951.77 billion, dropped as much as two percent over the last 24 hours. However, the overall trade volume fell by close to $17 billion, or $54.09 billion. “The factors that are affecting trade volume apart from inflation include the implementation of cryptocurrency tax and lack of global crypto regulation,” Laxman Singh, founder, Bitbatua, a crypto payment gateway said.
For industry experts, “Money is flowing out of risky crypto assets. We are nowhere near a bottom in the crypto markets and until we see some clear tailwinds which will get retail investors back into this space, lower cryptocurrency prices will be the norm for the foreseeable future,” added Chowdhry.
It is believed that, “Financial advisors recommend crypto investors have 5% or less of their investments with cryptocurrencies and diversify their investment portfolio. While most investors are not aware of this strategic way of capitalisation on cryptocurrencies, they might be affected by the present scenario,” Vijay Pravin Maharajan, founder, CEO, bitsCrunch, a blockchain analytics firm, stated.