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3 Reasons behind bitcoin-crash that pushed Bitcoin price below $50,000

bitcoin falling

bitcoin

Bitcoin prices has been falling for a few days. It’s never easy to pinpoint a specific reason for the crash of bitcoin and other cryptocurrencies, but there appear to be several factors at play in this situation.

To put the extent of the decline into perspective (albeit the price of bellwether Bitcoin (BTC-USD) had rebounded slightly by early Saturday afternoon to around $48,000, from a low of approximately $45,000), consider that BTC was testing $57,000 just Friday. The loss from that point to this afternoon’s prices is 14.2 percent.

Other digital currency, such as Ethereum (ETH-USD), have also dropped in value during the last 24 hours. “The whole crypto market cap plummeted from $2.6 trillion on Friday to $2.07 [trillion] on Saturday,” according to Republicworld.com. Last month, the overall market value reached $3 trillion for a brief moment.”

So, what’s going on here?

THE FEDERAL RESERVE

the fed

 

Speculative assets have investors worried by the first dip in plain vanilla stocks, which was sparked in part by Federal Reserve taper rhetoric. “The US Federal Reserve’s tapering might shatter the Bitcoin and crypto bubble,” said renowned investor Louis Navellier.

The Fed’s tapering, according to Navellier, “should cause a correction in risk assets, of which Bitcoin is a part.” He also cautioned that the price of Bitcoin might fall below $10,000.

THE COVID

omicron covid

Obviously, the Omicron variant outbreak and the uncertainty surrounding its severity – as well as the efficacy of vaccines, which is yet unknown – has sent investors fleeing for cover (which I touched on yesterday.)

THE  HOLIDAYS

It’s also the holiday season. As the year draws to a close, many investors are trying to lock in gains and take money off the table. Even with the current drop, BTC is still up 66% year to date (Bitcoin started the year around $29,400).

What are our options now? It’s never easy to tell. Winter is unmistakably approaching. Is it, however, crypto winter?

If I had to guess, I’d say the severity (or lack thereof) of Omicron may be a major deciding factor.

 

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