Why did Bitcoin lose half its value in less than a year?


Why did Bitcoin lose half its value in less than a year?



The digital currencies, Bitcoin, witnessed a very large decline during the last period, especially with investors heading towards the US dollar with the rise in bond yields, and the major digital currencies decreased on average by 15%, and “Bitcoin” decreased by 20% over the past week, and even the “Dogecoin” backed currency From the famous American billionaire Elon Musk fell by 10%.


Since the "Bitcoin" recorded its highest value ever on November 10, 2021 at more than 68,000 dollars, the cryptocurrency has lost more than half its value in less than a year.


This raises the question of the reasons for this sharp decline for "Bitcoin" and whether this trend will continue or its price will rise again.


After falling below $30 thousand for a moment yesterday (Monday), Bitcoin rose again to cross the $31,000 level again during yesterday's trading, prompting some observers to consider that there is a "price resistance point" around the $30 thousand level.


The point of price resistance means that the price of the commodity (the currency) usually does not exceed that point, because dealers below that point begin to consider the commodity, the asset or the currency an “opportunity” because it is undervalued, and therefore they accept to buy it, and thus the low price curve shifts Or retreating to another heading to rise.


But this price resistance point may not last long due to the presence of many basic factors that raise concerns about the future of “Bitcoin” in general, perhaps the most prominent of which is the US Federal Reserve raising interest rates by 0.5%, which is the largest raise in more than 20 years, and the trend for more interest rate hikes. In the near future, this will increase the attractiveness of the dollar against the bitcoin.


The American "Time" magazine also indicates an increasing trend among investment experts to warn "ordinary people" against investing in "Bitcoin" because of its "fragile situation". Some even warned against allocating more than 5% of the investment portfolio to professional investors in it as well. These warnings had the effect of encouraging selling operations, and thus the price continued to decline.


Many also noted the danger of investing in “Bitcoin” in times of recession and high inflation, which remarkably limited the demand on the part of some groups who see digital currencies as a way to maintain or increase the value of their savings without effort, which negatively affected the price of digital currencies.

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