Bitcoin has disappointedly recorded a significant drop in value as it traded below $30,000 in the last 24 hours.
As Ether, which is the second-largest cryptocurrency in terms of market capitalisation, was trading at $1,730, a 6% drop during the same period under review, Bitcoin was trading at $29,574.21, down 5.8%.
Why is Bitcoin falling
Prior to now, it was common knowledge that Bitcoin is a store of value, just as gold was decades ago. This is because, amongst other reasons, the number one cryptocurrency was immune to fluctuations in the value of risk assets. Unfortunately, this is no longer the case.
As investors in the cryptocurrency market are witnessing today, Bitcoin has fallen victim to the factors that determine the value of risk assets, such as stock markets, and inflation.
“The reason that this particular decline is occurring right now is that cryptocurrency market narratives have shifted from risk-on to risk-off,” said Dr. Richard Smith, author of the Risk Rituals Newsletter. “Liquidity is drying up as the Fed and other central banks start to taper excess stimulus, and also as regular folks start to realize that Covid-19 is winding down, that we are going to go back to work, and that we’re not all buying NFTs and moving into the metaverse tomorrow.”
