The sharp decline in the price of Bitcoin at the beginning of 2022.
Amid the cryptocurrency market crash, the value of Bitcoin has halved compared to the peak reached at the end of November. The currency’s price fell to $34,000, which is 10% lower than a week earlier.
The decrease in market value has also affected other digital currencies. Over the past weekend, the cryptocurrency market lost a total of approximately $130 billion, according to data from CNBC. For example, one of the popular currencies, Ethereum, started its decline on Monday. At that time, the price was holding at $4,000, but today it has dropped to $2,100.
A significant factor in the cryptocurrency crash has been the tightening of monetary policy by the US Federal Reserve. According to The Wall Street Journal, the increase in interest rates triggered widespread panic among Americans, leading many citizens to sell off their assets. The cryptocurrency market has recently experienced heightened volatility, primarily due to investors’ fears. They believe that cryptocurrencies will not be able to serve as a full-fledged means of payment due to the lack of infrastructure.
A week ago, the US Federal Reserve published a long-awaited report in which specialists analyzed the advantages and potential risks of trading on a cryptocurrency exchange for central bank digital currencies (CBDC). Although financial analysts did not take a definitive stance on digital assets, the document reflects the government’s concern about the current situation. Despite Bitcoin being regulated by federal authorities in the US, there remains worry about the low level of oversight in the cryptocurrency market.