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Cryptocurrency crash: Downfall of Bitcoin is Not The End of Investment

Investors of bitcoin saw over #1 trillion wiped off their investment as the cryptocurrency crash within the last 24hours.

At its lowest on Saturday, one unit of Bitcoin sank below the $42,000 mark, losing as much as 22 percent, as per a Reuters report. The fall of Bitcoin as the largest coin is the main reason for Cryptocurrency Crash.  This comes as amid Christmas risk-off taking cue from the global stock markets, which remain volatile for the same reason.

Crypto investors suffered a major blow on Saturday after Bitcoin, Ethereum, and other coins dropped in value by over a billion dollars.

This happens as global investors sold off their coins to settle for secure investment options as Christmas day nears.

Bitcoin the largest cryptocurrency by market value, plunged by 31.6% from the year’s high of $69,000 reached on Nov. 10.

According to data from CoinDesk Bitcoin with almost $900 billion worth of units in circulation, traded below 42,000. According to data from CoinMarketCap, Bitcoin prices stood at $47,664.16.

Ethereum, the second-largest cryptocurrency by market capitalisation, also fell to as low as $3,905 on the day, declining by almost 15 percent.

At the time of writing, the altcoin gained some momentum to stand at $3,946.76 per unit. This was still down by 13.46 percent over the last 24 hours and by 5.18 per cent over the last seven days.

Why Bitcoin Crash?

According to a reports, the crash is an outcome of a risk-off sentiment among investors that has been triggered by the detection of the new Omicron variant of Covid-19 The report also showed it can also be attributed to a sudden incline towards hawkishness by US Federal Reserve Chairman Jerome Powell.

The overall decline is a symptom of lost confidence amongst market participants.

The mass selloff came alongside a similar downturn in the stock market and followed a warning from one longtime investor.

Louis Navellier warned that the proposed “tapering” by the Federal Reserve would burst the flourishing crypto bubble. He recently wrote tapering would create a “correction in risk assets, of which bitcoin is a part”.

Some leveraged buyers of Bitcoin were flushed out in Saturday’s crash, according to Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore.

“Markets have also been jittery with all the uncertainty around omicron, with cases now appearing in many countries,” he said. “It’s hard to say what that means for economies and markets and hence the uncertainty.”

About $2.4 billion of crypto exposure, both long and short, was liquidated on Saturday, the most since Sept.  ..

However, some see this is as a temporary blip for bitcoin, with crypto enthusiast (and President of El Salvador) Nayib Bukele making the most of the opportunity.

He announced that he was going to “buy the dip” to add to his nation’s reserve. El Salvador was the first country to turn bitcoin into legal tender.

As usual, since crypto traders deploy leverage it results in cascading sell orders and liquidations,” said Antoni Trenchev, co-founder of crypto lender Nexo. “We should find support around $40,000 to $42,000 and then rebound in line for a end-year rally. If that does not hold, we might revisit the July lows of $30,000 to $35,000.”

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