Bitcoin, Ethereum and other cryptocurrencies over the past year has gained a massive amount of attention, with countries like El Salvador recognising Bitcoin as their official currency, businesses like Elon Musk’s Tesla having Bitcoin and Dogecoin on the balance sheets and Bitcoin farms growing globally. This contributed in the price increase from roughly $7,300 in July 2020.
Bitcoin is presently trading on 24th of January 2022 at $33,629.50 (£24,913.91), down more than 50% from its all-time high of $69,044.77 (£57,903.92) set in November 2021, erasing nearly $1.5 trillion from the market valuation. (Update: As of 26th of January 2022 09:00am, it’s trading at $37,635.33 (£27,884.58) and has risen around 11% in 48 hours.) Source: Coindesk
For anyone unfamiliar with Bitcoin, Ethereum, or any other cryptocurrency, Bitcoin is the most extensively used digital currency, created to serve as a medium of exchange and mined to contribute to the ecosystem. Bitcoin and other cryptocurrencies are attractive because they are unregulated and have a finite amount, implying that after they are all mined, the price will soar.
This week alone, Bitcoin is down 18%.
But what’s causing the massive drop in the value of all cryptocurrencies?
Nasdaq and stock market crash
The stock market has undergone nothing but losses starting 2022, with shares decreasing in value, but the link between Bitcoin and technology or mining stocks isn’t new. As more firms embrace Bitcoin, their stock has become reflected in the cryptocurrency.
This could be a major reason for the steep decline in cryptocurrencies like Bitcoin.
Media Scare Mongering
As Bitcoin and other cryptocurrencies have attracted a lot of interest in the last year, media sources have been reporting on price drops, which has caused concern among cryptocurrency holders, prompting some to sell their shares to avoid losing money.
This causes concern in the stock market, particularly among companies that own Bitcoin, such as MicroStrategy, whose CEO Michael Saylor is convinced that Bitcoin will climb and thrive. At an average price of $29,861 (£22,137.45) per Bitcoin, the software business currently holds around 124,391 bitcoins.
But the media questions what happens if the price of Bitcoin declines below the average purchase for MicroStrategy – do they sell, or buy more?
If a large company sells, that warns that the average cryptocurrency holder needs to sell as soon as possible too.
As Elon Musk addressed on Twitter, Bitcoin isn’t energy efficient for our world, and hence suspended Bitcoin vehicle purchasing.
Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment.Elon Musk, CEO of Tesla, Space X and Boring Company via Twitter
According to the Cambridge Bitcoin Electricity Consumption Index, as the price of Bitcoin has risen, so has network power demand and electricity consumption. As a result, Bitcoin mining companies are being pushed to create a solution that incorporates sustainable energy sources such as solar panels and wind turbines.
Bans from China and Russian banks on Bitcoin and Crypto Trading Activity
Government authorities in China and Russia have begun to ban the use of cryptocurrencies in their respective countries, raising fears that the growth of cryptocurrencies might destabilise and disrupt their own financial systems.
The good news is that other governments, like the United States, are considering how to regulate and regulate mining companies because they consider the business model benefits their economy.
Huge usage of Bitcoin in Cyber attacks
Another reason for Governments to ban cryptocurrencies is that it’s mainly used in illegal activity like cyber-attacks and ransomware.
Ransomware has increased dramatically in the last three years, and cyber criminals prefer Bitcoin or other cryptocurrencies as ransom since there are no governing organisations to monitor it and it is difficult to trace.
Some good news to Cryptocurrency
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