Bitcoin sheds 7.2% today dropping to a low of $34,042.78. | Why Bitcoin loses more than 50% of its value recently?? Bitcoin sheds 7.2% today dropping to a low of $34,042.78. | Why Bitcoin loses more than 50% of its value recently??

Bitcoin sheds 7.2% today dropping to a low of $34,042.78. | Why Bitcoin loses more than 50% of its value recently??

Why Bitcoin crashed recently??

According to Bloomberg, Bitcoin, the world's largest and best-known cryptocurrency, has lost more than 50% of its value since its record high in November, accelerating the cryptocurrency meltdown.

Bitcoin fell 7.2 percent today, reaching a low of $34,042.78 before recovering most of its losses, according to Coinbase. Other digital assets, meanwhile, have suffered losses, with Ethereum down 13%. Solana and Cardano both saw their stock prices plummet by at least 17%.

The collapse of the world's most valuable cryptocurrency has wiped out more than $600 billion in market value and more than $1 trillion from the total cryptocurrency market.

Why Bitcoin crashed??



"Margin positions being liquidated caused a wave of additional sell pressure, as assets that had been held as collateral were forcibly sold to pay for margin loans," said Hayden Hughes, CEO of Alpha Impact in Singapore.

While there have been much larger percentage declines for both Bitcoin and the aggregate market, "this marks the second-largest ever decline in dollar terms for both," according to Bespoke Investment Group.

"Before expecting any sort of bullishness, I would expect it to take some time for a bottom to form and confidence to return," Hughes said. 

It's worth noting that the US Federal Reserve's intentions to rein in inflation have rocked both cryptocurrencies and stocks, forming a dominant theme in the digital-asset space.

According to media reports, US President Joe Biden's administration plans to release an initial government-wide strategy for digital assets as early as next month, and will ask federal agencies to assess the risks and opportunities they present.

Cryptocurrencies have a life of their own, according to Kara Murphy, chief investment officer at Kestra Investment Management, but the recent slump is rational.

"It makes sense that as people start to retrench a little bit and look for something more solid, they'll move away from crypto," she said. "On the margin, as people become more risk averse, cryptocurrency will suffer."


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