CRYPTOCURRENCY prices plummeted earlier this week, including Bitcoin – we explain why it crashed and if the coin will bounce back.
Bitcoin spiralled to its lowest value since July 2021 earlier this week, dropping to $26,401.
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That marks a fall of 53% compared to this time last month, when Bitcoin‘s value stood at $40,447.
It is the original and largest cryptocurrency with a market capitalisation of $887billion and market share of almost 40%.
It wasn’t the only cryptocurrency which took a tumble.
It came as a global downturn in cryptocurrencies earlier this week meant investors lost thousands of pounds.
One investor claimed they lost as much as £60million in a single week after Luna crashed.
It has sparked fears about the long-term future of cryptocurrencies, and whether the market will ever recover.
But a word of warning – investors should be cautious when putting their money into cryptocurrency.
They are extremely volatile, meaning their value can plunge within seconds and you could lose all of your money.
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They can also be complicated and you shouldn’t invest in products you don’t understand.
You should also be wary of scams as cryptocurrencies aren’t regulated in the UK.
That means if you lose your money you won’t be able to get it back.
Why did Bitcoin crash?
Bitcoin, and other cryptocurrencies like Ethereum, plunged in price this week, reflecting the global markets and fears over inflation and interest rate rises.
Concerns over inflation and interest rate rises have affected the mainstream markets, and that has also had a knock on effect on crypto values.
The drop has also been prompted by regulatory crackdowns and bans in China and Russia.
Many crypto-mining regions in China are now radically reducing operations.
Previous moves by the country to crackdown on mining and trading of crypto has previously sent markets plunging.
And the unrest in Eastern Europe has contributed to the fall because investors tend to shun risk-sensitive assets during uncertain times.
Will it go up again?
Bitcoin has already started to make a bounce back.
It is up 4.17% since yesterday, trading at $30,165.
But that in no way means the coin will climb even further.
Prices can go up and down in the blink of an eye – one day you might be up, but the next day you could lose all your money.
Interactive Investor head of investment Victoria Scholar told The Sun that investors could face a “crypto winter”.
She said: “Recent price action serves as an important reminder of the wild swings that are characteristic of the crypto market that can on the one hand can create outsized gains for traders and investors but can also lead to damaging losses.”
City of London watchdog the Financial Conduct Authority has warned that crypto is a high-risk investment and investors should be prepared to lose all their money.
A Terra Luna investor lost their entire £400,000 life savings after the crash this week.
While a student put all their money into crypto but lost out too.
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