Cryptocurrencies are currently in a tough spot with the market value of digital assets dipping below $1 trillion earlier this month.
According to data site CoinMarketCap, cryptocurrencies hit $926 billion for the first time since January 2021.
Bitcoin, the largest cryptocurrency, has been hit hard, falling to an 18-month low of $23,750 (19,19,475) – its value is down around 50% this year.
The global crypto market hit $2.9 trillion in November 2021, but what’s behind this year’s drop?
This was what was happening…
Why is cryptocurrency crashing?
There is no specific cause for the cryptocurrency’s decline, but experts suggest it is due to the broader global climate, not the currency itself.
Inflation has risen in recent months, as has the cost of living crisis, reaching a 40-year high in the UK in May. Not only is the UK experiencing this, but inflation in the US is rising as well. According to MarketWatch, it is around 8.6%.
All this means that large investors take less financial risk.
In the past two months alone, investors have shunned riskier assets due to high inflation and fear that raising interest rates by central banks will slow growth.
At the same time, those with less money are less likely to invest, which in turn affects the value of cryptocurrencies.
Cryptocurrencies are not regulated by financial authorities, which means that if a cryptocurrency loses its value, anything created from the cryptocurrency will be deleted and can save your life if used for investing. Please note in particular. First place.
This happened in May, when Ethereum, the second largest digital currency in the world, fell by 20% in 24 hours.
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Investors panicked that day with over $200 billion registered in the crypto market.
The other two coins also fell last month: TerraLuna and TerraUSD, TerraLuna reached $118 in April and fell to $0.09, while TerraUSD fell to $0.4.
What to do with your investment in Bitcoin?
It depends on many factors: the amount of investment you have made, what time it is for your investment and your risk tolerance.
Generally speaking, you should invest only dangerous capital, that is, money that you stand to lose. If you follow this Bitcoin approach and its rise or fall does not cause significant difficulty, it is best to keep your investment.
Sam Walkerring, a cryptocurrency expert at Cryptocurrency, told Exponential Investor:
Bitcoin is currently declining, but there is nothing to suggest that its value won’t start rising again in the future, so your investment may become financially valuable again.
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Source: Metro
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