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This Is Why Bitcoin Keeps Dropping In Value

This Is Why Bitcoin Keeps Dropping In Value

Bitcoin has dropped more than 72% in value since hitting an all-time high of roughly $69,000 last year’s November, and according to data from Coinmarketcap, the digital asset is now hovering around $19,000.

The sharp decline in the value of Bitcoin as it has been experienced in recent months represents a major break descending from the $28,000 to $32,000 range it had been pricing since early May 2022.

How Bitcoin started to drop

Even though the value of the digital asset went up by over 300% in 2020, the year ravaged by COVID-19 lockdown, Bitcoin has dropped by over 59% from December 2022 when it traded at $47,000.

Investors in the cryptocurrency world are said to be selling their risky assets and going after the safer ones.

Maintaining that asset holders are in a risk-off mood, embracing “a general flight to safety across the board in most asset classes,” Alex Reffett, a co-founder of wealth management firm East Paces Group, explained that “investors have shown more interest in value-based investments and less in speculative stocks and alternative ‘store of value’ investments.”

According to Reffet, investors are now being influenced by Federal Reserve interest rates, which by default reduces demands for more growth companies—like tech stocks—and speculative risk assets—like Bitcoin.

Backing Reffett’s claim, Richard Smith, the Author of the Risk Rituals Newsletter, explained as well that “the reason that Bitcoin decline is occurring this year is that market narratives have shifted from risk-on to risk-off. Liquidity is drying up as the Fed and other central banks start to taper excess stimulus.”

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