Cryptocurrency is a topic that has sparked debate for quite some time. While crypto enthusiasts are eager for cryptocurrencies to enter new markets and expand their reach, banks and financial institutions have remained skeptical of it, given that it is used for activities such as money laundering. This to-and-fro game has put the price of cryptos in flux – sometimes they go up, sometimes they come down – now, unfortunately being the latter. Bitcoin fell below $42,000 to levels that have not been seen since September, amid fears of tightening regulations by US Fed.
The leading cryptocurrency fell to $41,012 during Friday’s Asia session, hitting the lowest level since Sept. 29 and taking the weekly decline to 12%, CoinDesk data show.
This development also comes after the Federal Reserve’s December meeting found that the economy was “much stronger, with higher inflation” than in previous recoveries.
Bitcoin is to date the largest cryptocurrency there is and the most popular one. This comes as a surprise considering that it had risen by nearly 60% last year, outperforming other asset classes by a large margin. It had also reached new heights, mainly by the actions of individuals like Elon Musk and Jack Dorsey. Additionally, it was accepted as legal tender by El Salvador last June. From the end of 2019, bitcoin had risen by about 500%.
This week, however, its price has been tumbling down, and it has fallen by as much as 4.9% to come at $41,008.
This also means that bitcoin has dropped by about 40% from its price in November 2021 – nearly $69,000, which was a record in itself. The Bitcoin hash rate also dropped to 176 million terahashes yesterday from a record of about 208 million on January 1.
Other cryptocurrencies fared no better. Ether, the second-largest cryptocurrency, clocked a drop of nearly 8.3% to its lowest level since September.
Recent times are making it difficult for cryptocurrencies as they are struggling to recover lost ground. The financial markets are not having the best time either, and the rise in inflation (which continues to persist) is yet another factor that has made banks tighten monetary policy. In fact, inflation in Turkey reached 36% in December 2021, which is the highest in the past 19 years. In Germany, annual inflation grew in December at its fastest pace in nearly 30 years.
Add to that the not-so-friendly attitude countries like India and China have adopted towards cryptos, and you get an idea as to why cryptocurrencies have slumped in recent times.