Why is Bitcoin value dropping?

Bitcoin is the leading giant in the crypto market because of its role in the creation of the concept of this market. Since then, it has continued as an unrivaled king because of its part in the global market cap value. Bitcoin dominance has continued to steer the market throughout its struggle, as there has been no coin with this much influence.  

There have been other competitors like Ethereum and Binance Coin, but they would still need to work on their growth. Their bulk is too small compared to Bitcoin, and they would take time to challenge Bitcoin dominance. The threat to BTC’s value isn’t the following coins but the consistently bearish market, which has lowered considerably. Its value has continued to stoop lower, bringing its growth to a halt.

Here is a brief overview of the drop in BTC value, its reasons, and how the investor should react to the current situation.

Reasons for the drop in Bitcoin value

There are various reasons Bitcoin has seen significant depreciation in its value. Some of them are given as follows.

Lag in mainstream adoption

Crypto, especially BTC, came to the market intending to challenge the traditional financial system. It was the result of the global financial crisis in 2008-9, and its creator had the aim to protect its users from the impacts of the recession. It offered an alternative system, i.e., decentralized finance.

It has taken a decade to implement the system but hasn’t been able to challenge the traditional system. Thus, its mainstream adoption has been one of the main reasons it has seen a consistent drop in the current scenario.

US inflation

The country of origin of BTC and where it found its major investments was the US. There it saw opportunities for its growth as people invested. It took over a decade to consolidate its value as it crossed $60K in November 2021. US investors comprise a significant part of investments in this coin. If they divest their capital, it will impact the BTC market.

The same happened in the closing quarter of 2021 and the following months in 2022. The US inflation rates rose terribly as Federal Reserve made desperate attempts to control the situation. It didn’t happen, and the inflation rates are still soaring high. Thus, Bitcoin has continued to suffer, dropping its price value to the $24.5K range on 13 June 2022.

Global politico-economic changes

The strained geopolitical situation globally due to the Russia-Ukraine conflict has continued to impact Bitcoin. It was performing relatively better till the invasion of Ukraine by Russian forces. Though BTC tried to hold fast to its previous position, it didn’t happen, resulting in a free fall.

The situation came to control later, but the gradual loss in value continued. The result has been a more than $15K loss in Bitcoin price value. Thus, it would need stability in global politico-economic changes to improve its value. The current situation has little chance of happening, and Bitcoin might lower further.

Investors looking for stability

Investors look for better opportunities to improve their capital. If a market is continuously showing a bearish trend, there are sell-offs and a decrease in the value of the market. The same happened to the crypto market in general while Bitcoin value in particular. Instability led to decreased investments and, finally, the gradual loss in value. If Bitcoin’s value stabilizes, it will attract further investments.

Should Bitcoin investors panic?

The impact of traditional markets on the crypto market can’t be denied. According to analysts, Bitcoin has seen price fluctuations, leading to even a 50% loss in price value more than five times. So, it is not happening for the first time. Though there are chances of policy change or other drastic changes, the correlation to traditional markets shows it can regain value.

If the traditional markets are stable, it will also strengthen Bitcoin’s value. The investors need to heed the mentioned details as it would help them save their money from being lost.

Conclusion

BTC value has seen a consistent drop in value. Various factors have contributed to the loss in value. These include US inflation, global political instability, fluctuations in traditional markets, etc. Thus, all these factors must be considered to understand why Bitcoin is facing problems.